Goldman Sachs upgraded its rating for J Sainsbury PLC (LON:SBRY) on Friday to ‘neutral’ from ‘sell’ ahead of the blue-chip supermarket chain’s first-quarter trading update due next week.
In a note to clients, the US investment bank’s analysts said: “While we continue to expect both grocery and non-food earnings to be pressured, and sit below consensus EBIT and EPS for FY20-22E, the stock has materially underperformed peers (-28% YTD vs. our pan-European food retail coverage weighted average +4%).”
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They added: “It now trades on c.9.5x FY20E PE, more than 20% below its 5/10 year average, which suggests the market is already pricing further estimate downgrades.”
The Goldman analysts concluded that with 13% upside to their revised 12 month target price of 215p, down from 225p previously, versus a 12% average upside across their coverage, they believe downside risks are more limited, hence the upgrade to rating.
Sainsbury’s will issue its first-quarter trading update on Wednesday 3 July.