Broker snap: Citi upgrades Sainsbury, expects 'big' Q2 improvement

20th Sep 2013 09:42

Citigroup has upgraded its rating for supermarket chain Sainsbury from 'sell' to 'neutral', saying it expects a 'big improvement' in sales trends in the second quarter.Ahead of a trading update on October 2nd, the US bank forecasts like-for-like sales growth of 2.8%, well ahead of the 0.8% increase delivered in the first quarter.As for the first-half results due on November 13th, Citi said it expects stable margins and solid earnings expansions."On both sales and earnings we anticipate that Sainsbury's 1H will show substantially more progress than either of its UK rivals. This is not a 'sell' in our opinion," said analysts Alastair Johnston and Pradeep Pratti.The bank has named Sainsbury as its top pick among the UK grocery sector.It has raised its target price from 350p to 400p "partly on account of the general re-rating of the market but also due to evidence of Sainsbury's relative operational momentum".The stock was 1.38% higher at 396.4p by 10:02 on Friday.BC