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JPMorgan reiterates 'underweight' on B&M after profit warning
(Sharecast News) - JPMorgan Cazenove reiterated its 'underweight' rating on B&M European Value Retail on Wednesday and trimmed the price target to 205p from 207p following the discount retailer's profit warning a day earlier. The bank noted that B&M downgraded its short-term and long-term margin outlook, driven by the need for a holistic repositioning of its UK core business.
JPM said: "Management is rightly focusing on some of the key issues (price, price architecture, range, availability), however, we suspect there could be more forthcoming (space, capital return policy in the context of increasing leverage).
"Overall, we think turn-around risks are yet to be further priced-in."
The bank reiterated its UW rating on around 20% earnings downgrades and 30-40% lower free cash flow expectations.
JPM said it continues to prefer Sainsbury and Tesco, both of which it rates at 'overweight', as more visible investment cases in the UK grocery space.
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