Shares in Majestic Wine (LON:MJW) soared in response to a strong Christmas trading statement, putting on 12.7 percent by 10.50 am to 393.25 pence.
The retailer reported that total UK store sales in the nine weeks to January 2 2012 were up 8.4 percent from the same period a year earlier. On a like-for-like basis, the figure was 4 percent higher year-on-year.
This performance bought the like-for-like UK store sales growth to 2.7 percent for the first 40 weeks of the financial year, Majestic added.
Investec Securities reiterated its ‘buy’ rating on the stock, noting that the figures showed a typically robust sales performance over the key Christmas trading period.
Analyst David Jewry said the strong like-for-like sales growth should not only allay fears prompted by weak current trading announced at the interim stage, but also underpins his unchanged pre-tax profit target for the 2012 full year of £22.5 million.
He has a 450 pence price target on Majestic.
Collins Stewart is also saying ‘buy’ with a 505 pence target. According to analyst Wayne Brown, the performance shows that Majestic’s weakness in the first weeks of the financial second half was a blip.
While he acknowledges the tough consumer backdrop, he sees a number of positive catalysts for the wine retailer in the coming months, such as the Queen’s Jubilee in June, the European football championship in June/July and the London Olympics in summer.
Brown believes that current weakness of the stock offers a buying opportunity, as Majestic has underperformed the FTSE 350 general retailers by 13 percent in the last three months.