Liberum Capital wants to see Poundland Group Plc (LON:PLND) return to core sales and show profit growth before any upgrade is warranted.
Analyst Wayne Brown says this morning’s weak trading update, for the fourth quarter, was as the market expected given the problems already flagged in the prior quarter.
Whilst the acquired operations of 99p Stores put a shine on headline numbers, Poundland revealed like-for-like sales were down 3.9% in the fourth quarter which meant half year like-for-like sales had dropped 4.9%.
Brown repeated a ‘hold’ rating, whilst saying there was no visible catalyst for the share.
“We would need to see a return to sustainable profit growth in core Poundland before we believe a more positive recommendation is deserved,” the analyst said in a note.
Elsewhere, Peel Hunt upgraded JD Sports Fashion Plc (LON:JD.) to ‘buy’ from ‘add’ after this morning’s financial results statement showed what analyst Jonathan Pritchard called “extremely impressive” profit delivery.
The trainer and premium leisurewear retailer reported a 45% rise in profit before tax (and exceptional items) to £157mln on revenues of £1.82bn, and told investors it had gained traction in its roll-out in Europe.
“Management spent the whole of last year upgrading guidance and still managed to thrash FY PBT forecasts: expectations were for £150m of PBT but the answer was £157m,” Pritchard said in a note.
“Simply put, management improved cost ratios by more than we expected.”
Elsewhere, Societe Generale downgraded Tesco plc (LON:TSCO) to ‘sell’ from ‘hold’ following Wednesday’s results.
Credit Suisse upgraded Johnson Matthey Plc (LON:JMAT) to ‘outperform’ from ‘neutral’.
Imagination Technologies Group Plc (LON:IMG) was upgraded by Barclays Capital to ‘equal weight’ from ‘underweight’, meanwhile Credit Suisse lowered its target price for the stock to 110p from 130p.