JD Sports Fashions PLC (LON:JD.) is an ‘overweight’ for JP Morgan after the investment bank initiated coverage with a target price of 1,000p.
According to analysts, the retailer is standing out as a partner of choice for brands in the sporting goods sector, which is seeing significant changes in distribution methods.
READ: JD Sports and Dixons upgraded as RBC highlights resilience of both firms in respective markets
In the last five years, direct-to-consumer expansion has become one of the cornerstones of designers’ strategies, which has combined with consolidation of the wholesale channel.
The FTSE 100 firm “should continue to benefit from ongoing wholesale consolidation in the medium term” thanks to its strong brand relationships and customer engagement, alongside a “solid” retail execution.
In fact, like-for-like sales have grown 10% on average over the past five years and they are expected to continue rising, supported by continued digital efforts, ongoing improvement of densities in the US market and consolidation in a good sector.
“We expect to continue to see solid top-line and earnings growth, at 9% and 14%, respectively, over the next 3 years (Jan-22-25), broadly in line with sporting goods brands,” the US bank said.
“We see JD Sports as an attractive way to play the positive dynamics of the broader sporting goods industry… Given the relative resilience of the sector so far during COVID-19, we would use short-term weakness and volatility as buying opportunities.”
Shares added 3% to 774.93p on Monday morning.