Sainsbury upgraded to 'buy' by Cantor Fitzgerald

11th Jun 2015 10:12

Cantor Fitzgerald upgraded J Sainsbury to 'buy' from 'hold' and lifted the target price to 312p from 275p, saying it believes the industry is near the bottom of its current deflation and margin cycle and the stock is supported by a dividend yield of 4.4%.It noted that sales volumes are improving this year, partly due to price investment but also growth in real consumer discretionary spend."Sainsbury's continues to gain UK market share helped by a store portfolio that is 60%+ exposed to wealthier consumers in London and the South, as well as faster growing convenience and non-food sales," said Cantor."Sainsbury could achieve higher sales volumes this year due to its improved product mix and the benefit of higher household earnings. We expect trading margins to start gradually rising next year."Cantor maintains its top-of-the-range underlying pre-tax profit estimate of £605m, versus consens of £548m and says its full-year 2016 forecast is based on group retail operating profit of £645m and bank profits of £65m.At 10:20, Sainsbury shares were up 2.6% at 267.00p.