Broker snap: Sainsbury best placed among UK supermarkets, says Panmure

8th Jan 2014 10:18

Panmure Gordon has maintained its 'hold' rating for Sainsbury despite the supermarket group beating consensus forecasts with its third-quarter results."We think Sainsbury's is the best placed of the UK food retailers, and the Q3 trading statement is encouragingly towards the upper end of market expectations," Panmure said.The stock trades at 11.3 times earnings and offers a 4.7% dividend yield which the broker admits isn't particularly demanding."It is our favourite of the three grocery stocks [Sainsbury, Tesco and Morrison], although our caution on the short-term sector outlook as a whole holds us back from having a more positive recommendation at the moment."The retailer delivered like-for-like sales growth of 0.2% excluding fuel in the 14 weeks to January 4th, beating the Panmure and consensus forecast for a 0.4% decline.The broker said that Sainsbury's offering is "well set up and balanced" with the usual growth engines "continu[ing] to fire"."A very difficult October and November was made up by strong Christmas trading, and once again Convenience, Online, Taste the Difference, General Merchandise and Clothing all performed strongly (although Online has slowed from H1)."Panmure maintained a 400p target for the stock, which offers only moderate upside to Wednesday morning's price of 362.19p, down 1.82% on the day.BC