No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Berenberg reiterated its 'buy' rating on JD Sports Fashion on Thursday, saying it continued to see mediumterm recovery potential supported by a series of selfhelp measures.
Bernberg highlighted plans to broaden JD's product range, optimise stores and step up longoverdue investment in its online channel as it said many of the firm's recent challenges were largely external, pointing to a slowdown across the sportswear market, weaker demographics, pressure on disposable income among its predominantly Generation Z customer base and a loss of brand momentum at Nike, which accounts for around a third of group revenue.
The German bank said these headwinds were compounded by M&A distractions and slower progress in tech and online. However, Berenberg noted that the industry structure remained intact, with major sportinggoods brands still relying on wholesale distribution for more than 60% of revenue and JD retaining its position as the leading global distributor.
Berenberg said JD's valuation remained undemanding at a 7x price-to-earnings ratio, with a 12% freecashflow yield and a rolling 200m buyback worth around 5% of market capitalisation. Its price target of 155p offers "significant upside", with a bluesky scenario of 211p.
Berenberg added that JD had entered a postM&A phase and expected to track lowsingledigit sportswear market growth over the medium term. Against that backdrop, the group was pursuing selfhelp across product assortment, store refurbishments, website and app development, customer experience and logistics. Berenberg said JD had opportunities to expand apparel, diversify ranges and cater to sports fashion, streetwear, lifestyle and outdoor trends, while management remained focused on cost control, capex discipline and freecashflow generation.
Shore Capital downgraded Capricorn Energy on Thursday to 'hold' from 'buy' after it agreed to be taken over by Genel in a $360m deal.
The broker said that at a circa 27% discount to its 489p/share tangible NAV, it has "some sympathy" with the view that Genel's offer falls short of a full valuation for the Capricorn business.
"However, it does come from an established regional oil producer with a clear plan for funding the circa $360m acquisition and is described by Capricorn as 'a meaningfully superior proposal relative to other credible proposals received'," it said.
Shore Capital said the gap between its tangible net asset value and the offer price leaves room for a competing bid to emerge.
"However, Capricorn management appears to have run a lengthy process exploring various proposals to reach this point," it said. "We therefore move our rating to hold from buy on the expectation that no higher offer emerges."
Shore said its target price of 357p was set in line with the offer price.