Broker snap: Bernstein sees 'compelling entry point' at Sainsbury

4th Feb 2014 09:47

Supermarket group Sainsbury was a standout performer on the FTSE 100 on Tuesday morning after analysts at Bernstein upgraded the stock from 'market perform' to 'outperform', saying that it is a 'well-run retailer'.The broker kept its 430p target price unchanged."Consumers know why they shop at Sainsbury's: quality food, sourced with integrity, priced at a premium, combined with Tesco matching prices on branded products," said Bernstein Senior Analyst Bruno Monteyne and team."Its distinctive offer, great store execution and a good format mix drove positive like for likes for the past 36 quarters and will continue to take market share from undifferentiated retailers (Tesco, Morrison)."The stock has been under pressure as of late, falling 6% over the past month, with its valuation now 18% below industry fair-value, the broker said.As such, this creates a "compelling entry point" given that recent concerns have been overplayed, it said.Sentiment has been dampened recently by suggestions of a price war between Sainsbury and Tesco, or speculation that Tesco will more 'upmarket' in a bid to take back market share. There has also been concerns with management changes after the recent resignation of long-running Chief Executive Justin King."However these concerns are already reflected in the share price and investors are overly worried about every possible UK scenario."Sainsbury was 2.2% higher at 353.2p by 10:00, while Tesco and Morrison were down 0.2% and 0.3%, respectively.BC