Broker snap: H2O Markets downgrades Sainsbury to hold

5th Oct 2011 10:22

H2O Markets has downgraded its rating on supermarket giant Sainsbury to hold as it believes that the firm will have difficulties keeping up with rival Tesco after the latter launched its 'Big Price Drop'."While the supermarket has a broad range of promotional initiatives to attract new customers, it is still behind the curve compared to rival Tesco, which is about to launch its "Big Price Drop" campaign," said economist Eku Kobayashi.Two weeks ago, Tesco revealed details of its campaign, a £500m price offensive which it claims will provide immediate help to struggling families. The firm reduced the prices of more than 3,000 products."H2O Markets believes that in spite of its own plans, Sainsbury will struggle to match the Tesco initiative in the run up to Christmas. Accordingly, we reduce our rating to hold," Kobayashi said.Nevertheless, Sainsbury's shares were trading 4.73% higher at 287.7p by 10:18 on Wednesday.BC