Broker snap: Sell Morrison despite the half-year beat, says H2O Markets

8th Sep 2011 10:58

While Morrison surpassed market forecasts with its half yearly results on Thursday, H2O Markets has reiterated its sell rating on the supermarket giant on the back of an uncertain outlook for the UK consumer."Currently, higher fuel prices and austerity measures have pressured consumer disposal income, and as a low-end market retailer targeting consumers with less income, Morrison is probably more vulnerable to these factors than its peers," said H2O economist Eku Kobayashi.Nevertheless, pre-tax profits rose to £449m from £412m the previous year, turnover climbed to £8.7bn from £8.1bn, while like-for-like sales rose by 2.2%. "In spite of these numbers, in the view of H2O Markets the longer term prognosis remains unchanged, as the negative influence of austerity measures and the grocer's geographic exposure will inevitably weigh more heavily in the weeks and months to come," he said.Shares were 3.63% higher at 299.90p by 10:55.BC