Analysts at investment bank Jefferies used Thursday’s interims as a prompt for a note assessing the vulnerabilities of J Sainsbury (LON:SBRY).
The company’s ownership of the Argos retail chain and a growing banking arm mean it is more at risk than its peers to a downturn in the UK economy, the US outfit told its clients.
“A discount valuation should persist as investors grapple with the wider UK macro discussion,” Jefferies said, restating its ‘hold’ recommendation and 250p share price target.
The shares, down 8% in the year to date, were marking time at 230p during a lackluster early afternoon session.
Jefferies said the headline first half numbers were slightly ahead of consensus, but also pointed to the slowdown in retail sales growth.
And while the grocer confirmed it is on track to hit City profit forecasts, pitch this around £572mln, Jefferies is expecting Sainsbury to post a £536mln surplus.
“At this juncture, it is sales shortfalls at the more operationally geared Argos, in the critical Christmas season which represent the biggest risk to estimates,” Jefferies said.