UBS has kept its ‘buy’ rating on J Sainsbury PLC (LSE:SBRY) and lifted its price target to 306p, citing strong grocery sales, improved performance at Argos, and sustained productivity gains.
The bank expects Sainsbury’s first-quarter update in early July to show 4% grocery growth, in line with recent industry data suggesting the supermarket is holding up well on both pricing and customer satisfaction.
UBS’s own tracking shows Sainsbury has increased prices less than its major rivals, supporting its value perception among shoppers.
Argos, Sainsbury’s general merchandise arm, is also expected to show improvement, helped by good weather and easier comparisons from a weak period last year. UBS forecasts 3.7% growth for Argos, up from its earlier estimate of 2%.
The analysts said the outlook for the year should remain unchanged for now, with the company likely to wait for more trading data before considering an upgrade. However, they noted that stable competition and rising productivity leave room for upside.
Valuation remains attractive, trading at 13 times expected 2026 earnings, below its long-term average. UBS sees potential for earnings upgrades in the medium term.
The stock was up 1% at 290p.