Broker snap: Morrison to start to attract again, says Jefferies

8th Mar 2012 10:37

Morrison is 'delivering for shareholders again', according to Jefferies which has reiterated its buy recommendation and 350p target price for the supermarket retailer this morning.The US broker says that Morrison's final results look strong, with profits before tax (PBT) of £935m coming in ahead of its £917m forecast and the consensus estimate of £922m."Morrisons has confirmed it is making progress on all margin drivers. IT, store productivity and sourcing of goods not for resale, each remain worth £100m of efficiencies by '13/14, with an extended vertical integration contributing another £50m. These are powerful margin enablers allowing Morrisons to confirm it is comfortable with '12/13 consensus expectations (we assume PBT of £965m/£970m)," analysts said.Jefferies says that the uncertainty of a changing margin structure at Tesco has been reflected in brokers downgrading estimates at Morrison as of late. However, with Morrison's current earnings estimates "well underpinned", it says that investors should start to "refocus on the group's own merits".The broker says that it expects a sub-nine price-to-earnings (2013) multiple at Morrison "to start to attract again".BC