Will shares in J Sainsbury rise?

J Sainsbury (SBRY)

Sainsbury (J) PLC (-)

Will shares in J Sainsbury rise back towards the channel ceiling at 295p or fall towards the floor at 227p?

The first thing we note on the SBRY chart is the ominous looking Bearish flag pattern with its potential to see shares return to the floor of their 20-month sideways range. The daily RSI also indicates a little more weakness to come – especially within such a well-defined trading range. That’s a short term, technical outlook for the stock.

Fundamentals may be taken one of two ways, as usual. J Sainsbury has the highest dividend yield (5%) of the big-three blue-chip listed supermarkets, which is a positive for income seeking investors. With shares trading at a decent 36% discount to our average 12-month forward P/E ratio, Sainsbury’s represents a potentially good value play too. Support seems solid around the 225p level.

Brokers are neutral to bullish (read ‘cautious’) on SBRY, yet 9 out of 13 brokers are suggesting upside potential. The average of all targets sits some 11% above current levels. The last ‘Sell’ rating was issued by Goldman Sachs in May.

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N.B. All pricing and consensus data was sourced from Bloomberg on 6 June. Please contact us for a full rundown.

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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