European food retailers among top losers as broker downgrade weighs
05/09/2023 10:06
** Several European food retailers stocks have sunk to near the bottom of the STOXX 600 .STOXX and FTSE 350 .FTLC ** JPMorgan downgraded the sector and four specific stocks ** Separately, Barclays data on Tuesday showed British consumer spending growth lost pace last month, though more figures from the British Retail Consortium showed many shoppers had returned to stores after a washout for retailers in July, giving a mixed picture ** JPMorgan note detailed cautious view of sector, citing "grocery pricing deflation prospects as we approach 2024" ** "We think current sentiment and valuations make for an unattractive risk reward as investors start to reassess portfolios into 2024, when we expect grocers’ P&L and CF dynamics to worsen vs 22-23, triggering downside risk to consensus," the JPM analysts write ** They add deflation implications are not factored into either expectations or share prices, but they remain bullish overall ** JPM downgrades four stocks they see as most exposed; UK food retailer B&M BMEB.L and the Netherlands' Koninklijke Ahold Delhaize .AD.AS , last down 4.5% and 5.8%, respectively ** JPM also downgrades Portugal's Jeronimo Martins JMT.LS to underweight from neutral, and Tesco TSCO.L to neutral from overweight. Jeronimo Martins shares fall 3.7% and Tesco down 2.4% ** Belgium's Etablissementen Franz Colruyt COLR.BR is JPM's sole overweight in the sector, shares up 5.7% ** Ocado .OCDO.L and Sainsbury .SBRY.L also fall 1.8% a piece, while in Europe, France's Carrefour .CARR.PA falls 2% (Reporting by Lucy Raitano; Editing by Amanda Cooper)