JD Sports upgraded to ‘outperform’ by RBC Capital Markets after building stronger position in sports

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JD Sports Fashion PLC (LON:JD.) was upgraded to ‘outperform’ from ‘sector perform’ by RBC Capital Markets after strengthening its market positioning during the pandemic.

Analysts also raised the price target to 950p from 900p as they believe the FTSE 100 retailer is well placed in the “attractive” sportswear segment, which is facing a positive outlook due to the consumer shift towards healthy lifestyles combined with product innovation.

READ: JD Sports raises GBP464mln via placing to boost acquisition power

Most customers prefer to shop in a multibrand environment and Nike is now moving to reduce its number of distribution partners, both of which are expected to be positive for JD Sports.

JD saw strong digitals sales over November and December, driven by strong ranges and availability, supported by the investments in online capabilities, the Canadian bank noted.

“Although we anticipate the digital retention rate falling back in the first half of financial year 2022, we see potential for JD to receive a sales boost from omnichannel capabilities when stores reopen,” analysts commented.

“The most recent acquisitions of Shoe Palace and DTLR should allow it to engage more with the lower income demographic and we expect JD to see sales and margin opportunities as a result of these acquisitions.”

“We think valuation remains reasonable given JD’s double-digit sales growth and we see further upside should JD maintain its recent track record of superior execution and omnichannel sales growth.”

Shares dipped 1% to 845.2p on Monday morning.

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