Broker tips: Sports Direct, Tesco, DS Smith

16th Apr 2014 13:02

Sports Direct shares were rising strongly on Wednesday morning as the stock bounced strongly after its recent weakness, with comments from Bank of America Merrill Lynch providing a boost.The US bank raised its near-term forecasts for the sporting goods retailer and lifted its target price for the shares from 1,000p to 1,070p, saying that the market is underestimating the company's international and online growth prospects.Tesco's annual results may have received a warm reaction from the markets on Wednesday, but analysts at Shore Capital said the figures make for "very disappointing reading" as they reiterated a 'sell' rating on the supermarket giant.However, Shore analysts Clive Black and Darren Shirley said that despite a 25% cut to their 2014/15 profit forecasts over the last year, "we cannot yet call the end of the downgrade cycle". They said that recent market share data in the UK and Ireland suggested "especially weak trading".Comments from JPMorgan Cazenove gave consumer packaging group DS Smith a boost on Wednesday, saying that the recent de-rating of the stock has created an opportunity for investors ahead of a trading update later this month. JPMorgan reiterated its 'overweight' recommendation and 355p target price for the stock.Since the start of February, DS Smith's share price has fallen by 6.7%, underperforming its peers, and it now trades at similar valuation multiples to others in the sector. "Yet, in our opinion, deserves a premium on account of its lower cyclicality and lower capital intensity," the bank said.BC