Jeronimo Martins stock price target lowered to EUR24.80 at JPMorgan

JPMorgan maintained its "Overweight" rating on Jeronimo Martins, while slightly lowering its price target to EUR24.80 from EUR25.00, and placed the stock on "Positive Catalyst Watch" ahead of its Q2 earnings on August 1. The firm anticipates a further 15% rally, building on its 20% year-to-date outperformance, driven by strong forecasts for Biedronka's 7% like-for-like sales growth and margin improvement, alongside robust Colombian operations. JPMorgan's profit forecasts for FY25-27 are double digits above consensus, signaling potential for significant earnings upgrades and valuation re-rating.

Analysis

JPMorgan has reaffirmed its conviction in Jeronimo Martins SGPS SA, maintaining an "Overweight" rating and placing the stock on a "Positive Catalyst Watch" ahead of its August 1 earnings report. Despite a minor price target reduction to EUR24.80 from EUR25.00, the bank's outlook is fundamentally bullish, forecasting a potential 15% rally on top of the stock's approximate 20% year-to-date outperformance. This optimism is anchored in expectations for strong operational performance, specifically a projected 7% like-for-like sales growth and margin improvement at its key Polish supermarket chain, Biedronka, supplemented by a strong outlook for its Colombian operations. Critically, JPMorgan's profit forecasts for fiscal years 2025-2027 stand double-digits above consensus estimates, suggesting the market may be underappreciating the company's earnings power and creating a clear opportunity for an earnings-driven valuation re-rating.

Key Decisions for Investors

• Investors should consider the upcoming August 1 earnings report a key potential catalyst, given the stock's placement on JPMorgan's 'Positive Catalyst Watch' and the expectation of strong results.
• Attention should be focused on the performance of the Biedronka division, particularly its like-for-like sales growth and margin evolution, as these are the core drivers of the bullish, above-consensus thesis.
• Given that JPMorgan's profit forecasts for FY25-27 are double-digits above consensus, investors should assess their conviction in a significant earnings beat and subsequent valuation re-rating, while noting the stock's substantial 20% year-to-date appreciation.