JD Sports Shares: Analysts Cautious Following Q3 Update

JD Sports Fashion (LON: JD.) has faced a more cautious reception after its Q3 trading update, with both Deutsche Bank and JPMorgan tempering their outlooks on the retail giant in recent research notes.

Deutsche Bank has shifted its stance, upgrading JD Sports from “Sell” to “Hold” while maintaining a price target of 110p per share on the stock. The bank noted that JD's performance in the U.S. retail market has been better than previously assumed, suggesting potential for improvement. 

While the company is more “in the pack” in the US retail segment, there “may be room for improvement, and reason to be cautious, on near-term visibility of trading,” said the bank.

Meanwhile, JPMorgan took a slightly more bearish view. Despite downgrading JD Sports from “Overweight” to “Neutral,” it significantly reduced its price target for the stock from 171p to 105p in a note last week.

The investment bank said it has concerns over the retailer's changing brand mix, casting doubt on its ability to offset weakness in Nike products, a key revenue driver.

Last week, JD Sports posted a 5.4% increase in organic sales growth for the third quarter. However, like-for-like (LFL) sales were slightly down by 0.3%, as a softer October counterbalanced strong performance in August and September.

Shares of JD Sports plunged more than 15% Thursday following the report. The stock is now down around 39.6% for the year to date.