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(Sharecast News) - Citi downgraded supermarket chain Sainsbury's from 'buy' to 'neutral' and lowered its target price on the stock from 377p to 335p on Tuesday following the group's "broadly in-line FY26 results" and weaker-than- expected FY27 EBIT guidance.
Citi now expects FY27 retail sales excluding fuel to rise 3.6%, slightly below consensus, with Sainsbury's grocery business still seen growing 4.3%, while Argos was expected to deliver only marginal gains.
The bank also nudged its FY27 operatingmargin guidance lower, reducing its EBIT estimate by 7% to 1.05bn, around 1% below consensus but still within the group's guidance range. Earnings forecasts, on the other hand, were cut more sharply, with FY27 and FY28 earnings per share reduced by 10% and 12%, respectively.
Citi now assumes a 20m contribution from Sainsbury's financial services arm, down from 25m previously.
Reporting by Iain Gilbert at Sharecast.com
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