Share Prices & Company Research

Market News

28 Nov 2024 | 14:40

JD Sports slowdown provides buying opportunity for investors, says Shore Capital

(Sharecast News) - JD Sports Fashion's share price took a dive last week after a gloomy third-quarter update, but analysts at Shore Capital reckon it's a good opportunity for investors to "get a foot in the door". "It's fair to say that JD Sports has not been a good stock pick in the past six months, culminating in a disappointing 3Q FY25A trading statement," Shore Capital said in a research note on Thursday.

A slowdown in October sales, especially in the UK and US, resulted in the company guiding to full-year profits at the lower end of the £955m-1,035m guidance range.

In the US in particular, Shore Capital highlighted that third-quarter like-for-like sales growth came in at -1.5% from +3.3% in the first half. "While the commentary highlighted the externalities driving this (US election, higher promotional activity, unseasonably clement weather, and no NPD from Nike), a turn around in the fortunes here will be key to improving investor confidence," the broker said.

Nevertheless, Shore Capital said it still remains positive on the medium-term outlook for JD Sports in the US, with the performance in Europe highlighting the growth opportunity for the business.

Reductions in full-year profit forecasts means Shore Capital's fair-value estimate for the stock has been reduced to 160p from 175p.

However, that still indicates substantial upside to current prices, with the stock up 2.3% at just 103.95p by Thursday afternoon. Even including the recent rebound in the shares over the past week, the stock is still down 22% over the past month and 35% lower over the year to date.

"Despite this cut, the shares look cheap to us, currently trading on CY25F EV/Sales of 0.6x, EV/EBITDA of 4.0x and EV/EBIT of 7.8x we see this current weakness as a great entry price with significant mid-term upside if the company can deliver on its ex-UK growth potential," the broker said.
Get in touch today
Join Redmayne Bentley
Talk to us now about opening a new portfolio or transferring your portfolio from another provider
0113 243 6941
Get in touch today
Contact your local office
Contact your local office to find out more
The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.