Cantor maintains 'hold' rating for Sainsbury post-Q1 result

10th Jun 2015 12:30

Cantor Fitsgerald has maintained a 'hold' recommendation for Sainsbury and kept its price target for the supermarket at 275p.Sainsbury reported its first quarter results on Wednesday, which beat market consensus. Total sales were down 0.6% with like-for-like sales declining 2.1%, slightly ahead of consensus (-2.3%).Cantor's forecasts for 2016 see the retailer's sales down 1.7% with store sales falling by 0.9%. The broking firm expects group trading profit to be about £650m, ahead of consensus and before bank and property profits.Cantor analyst Mike Dennis said while the rate of food price deflation increased across the quarter, the index indicated a small gain in overall volume.Dennis said the market is in a similar position as the end of the 1989-92 recession cycle, when discounters made strong inroads in the UK market.Nielsen and IRI figures show sales volumes have picked up in the last few months and Dennis said Sainsbury's lower promotional participation and mid-low pricing has recovered some volume."We believe Sainsbury's convenience stores continue to outperform the market, although no figure was given for Q1 (Q4 +14%), and clothing was up 5%" he said.Sainsbury's share price has underperformed the FT-All share by 4.8% since the full year results were announced on 6 May, reflecting downgrades to consensus and the risk to Sainsbury's trading margin.Cantor expects within the convenience and non-food sectors, Sainsbury is poised for growth due to its higher exposure to wealthier consumers in London and the South.At 13:07, the shares were up 4.62% at 260.50p.