Goldman double downgrades Sainsbury's to 'sell', shares slump

(Sharecast News) - Sainsbury's was under the cosh on Monday after Goldman Sachs downgraded its stance on the supermarket retailer to 'sell' from 'buy' and cut the price target to 335p from 390p, citing macro headwinds and intensifying competition in non-food retail. Goldman said that while full-year EBIT and free cash flow were in line with its expectations, with grocery sales up 5.2% and a 3% retail margin, the outlook from here is likely to be more challenging.

"This view stems from our recently downgraded UK HAC growth forecast, now just +0.6% year-on-year (the lowest since 2009, ex-Covid), and rising intentions to save (April GfK).

"In this context, we forecast another year of circa flat retail EBIT, assuming still elevated price inflation and grocery EBIT growth, offset by a -2% FY27E Argos LFL (FY26 +1%) and EBIT decline given the both demanding macro outlook, and growing competitive intensity."

Goldman noted that recently-launched Joybuy - a UK and European e-commerce platform owned by China's JD.com - already had 300,000 active users in March.

"Taken together, we reduce FY27E/28E EBIT -4%/-6% and target price to 335p," the bank said. "With our new TP implying circa 3% downside versus sector average +14% upside, we move to a sell rating on the shares."

At 1030 BST, the shares were down 3.1% at 333.92p.