Sainsbury’s share price: 3 things to watch out for in its half-year results

The British supermarket has seen its shares rebound from a 30-year low, though its first half performance is unlikely to be strong enough to drive further gains.

Sainsbury's will unveil its half-year earnings on Thursday, with investors braced for a disappointing set of results that could prompt its shares to fall.

IG looks at the key things to look out for ahead of Sainsbury’s latest trading update.

Goldman Sachs upgrades outlook ahead of Sainsbury’s results

Goldman Sachs upgraded its rating for the stock to ‘neutral’ in November and issued a 220p price target ahead of Sainsbury’s half-year results.

As it stands, Sainsbury’s share price closed at 206p on Wednesday. Therefore, Goldman Sachs’ analysts think that the stock has a potential upside of 7.3%.

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Sainsbury’s half-year results expected to disappoint

Despite Goldman Sachs’ optimistic outlook for the stock, its results are unlikely to help its shares climb higher, with headline earnings per share expected to fall 12.6% to 9p a share, while revenue is forecast to decline by 0.6% to £15.03 billion.

Analysts remain optimistic ahead of its half-year results, however. Of the 20 analysts covering the shares, seven have ‘buys’, ten have ‘hold’ recommendations, with three ‘sells’. The current median target price of 237p.

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Competition continues to hurt Sainsbury’s sales

Sainsbury’s sales have slumped of late due to stiff competition from rivals like Tesco, Lidl and Aldi.

The highly competitive landscape has led Sainsbury’s to cut costs, with the supermarket targeting £500 million in savings by 2024.

At the same time, Sainsbury’s continues its store opening programme, with 75 new premises set to open next year.

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