Erste Group recommends buying Jerónimo Martins shares

The Austrian banking group Erste is recommending the purchase of Jerónimo Martins shares, predicting they will gain in value by 15% to €25.10.

This week Jerónimo Martins shares rose 0.92% to €21.92 per share. The Erste Group has upgraded its outlook for the Portuguese grocery retailer’s shares.

The food distribution company has had a good year with first half profits up 6.6% to €269 million despite Jerónimo Martins Board President Pedro Soares dos Santos admitting that the consumer market had been “timid” making it difficult for the company to expand its business as its margins continue to come under pressure, according to the news source Expresso.

In 2Q the company’s profits had fallen 8.9% to €142 million. But for 2H overall the company had reported a growth in sales of 6.7% to €17.4Bn with a turnover in 2Q up 9.6% to €9Bn.

The group had succeeded in improving its EBITDA by 10.3% for the half to €1.148Bn and by 16.5% in 2Q to €620 million.

In the first half of the year, Jerónimo Martins opened 196 stores and remodelled 71 establishments. In addition to Portugal, where it operates with the Pingo Doce and Recheio chains, the group is present in Poland (with the Biedronka supermarket chain and health and beauty stores Hebe), Colombia (with Ara supermarkets) and Slovakia with Biedrionka supermarkets.