Broker snap: More reasons to buy Morrisons

21st Jul 2009 11:52

Supermarket chain Wm. Morrison has sent members of the investment analyst community scurrying to upgrade their full-year profit forecasts after releasing an upbeat trading statement.Merrill Lynch is a buyer of the shares and is predicting pre-tax profit of £750m for the year to 31 January, 2010. Prior to Tuesday morning's trading update, market consensus was for pre-tax profit of £665m.Cazenove, meanwhile, has ramped up its profit forecast by a tenth to £729m, and said that the trading update allays fears that the supermarket chain's growth rate was beginning to flag.Charles Stanley expects to lift its forecasts by 10% too, which in its case would put its prediction on £740m. "The group also has the strongest balance sheet in the sector (gearing c14%) and the highest proportion of freehold property (92%)," Charles Stanley analyst Sam Hart notes. "The recommendation remains Accumulate ahead of interim results on 10th September," the broker said.