Broker snap: JD Sports 'relatively undervalued'

16th May 2011 11:34

FinnCap raises its target price for retailer JD Sports Fashion saying that the group is "relatively undervalued" after a tough year for the industry: "we derive a level of reassurance from the company's recognition of the situation," the broker said.2011 results were better-than-expected, with pre-tax profit of £81.6m comfortably beating finnCap's forecasts of £78m. Revenues of £884m were £30m ahead of estimates.However, net sales during the eight weeks to 26 March declined by 1.2%, reflecting the VAT change "which, on its own, reduces the group's profit base by £16m," said analyst David Stoddart."Management is typically cautious about the outlook, and we share the team's concerns. We have therefore reduced our 2012 pre-tax profit forecast sharply," said Stoddart.Even so, the target price is increased from 1,125 to 1,175p, and a 'buy' is kept.---BC