TSX runs higher on rate cut expectations
Investing.com -- Shares of Jeronimo Martins climbed over 3% on Thursday after J.P. Morgan placed the stock on its Positive Catalyst Watch, anticipating short-term upside ahead of the company’s second-quarter earnings on August 1.
J.P. Morgan maintained its “overweight” rating and adjusted its price target to €24.80 from €25.
The stock, which closed at €22.14 on July 2, has gained 20% year-to-date. J.P. Morgan analysts see potential for a further 15% rally, driven by anticipated earnings upgrades and valuation re-rating.
The brokerage projects earnings per share of €1.24 for 2025, representing an 8.6% premium to consensus.
EPS estimates for 2026 and 2027 stand at €1.43 and €1.67, ahead of consensus by 6.4% and 9.1%, respectively.
Net income projections are also above market expectations, with J.P. Morgan forecasting €781 million for 2025, €918 million for 2026, and €1.07 billion for 2027, exceeding consensus by 10.2%, 11.7%, and 14.1%, respectively.
At the core of the bullish outlook is Biedronka, Jeronimo Martins’ Polish discount chain, which is modeled to deliver 7% like-for-like sales growth in the second quarter, alongside EBITDA margin expansion to 7.9%.
In Colombia, where operations are nearing profitability, J.P. Morgan forecasts 6% LFL growth and 4.0% EBITDA margins. In Portugal, mid-single-digit LFL growth is expected with stable margins.
J.P. Morgan’s group-level estimates for 2Q25 include 12% year-over-year revenue growth and 20% EBITDA growth, supported by calendar tailwinds.
For full-year 2025, revenue is forecast at €36.8 billion, EBITDA at €2.55 billion, and net income at €781 million. This implies year-over-year revenue growth of 10.0% and EBITDA growth of 14.1%.
Valuation remains a key pillar of the investment thesis. Jeronimo Martins trades at a 2025E P/E of 19.3x, a 24% discount to Zabka and 28% to Dino.
On an EV/EBIT basis, it trades at discounts of 7% and 35% to those peers, respectively.
J.P. Morgan argues this reflects overly cautious expectations compared to peers posting faster growth but commanding significantly higher multiples.
Positioning indicators are also favorable. According to the report, short interest has dropped to low single digits of free float, and the stock’s RSI of 62 suggests it is not overbought. No active shorts were reported on Bloomberg.
J.P. Morgan’s revised target price is based on a DCF model using a WACC of 11.2% and a 3% terminal growth rate, valuing the stock at €24.80 per share by end-2026.
The brokerage flagged earnings inflection, margin recovery, and low expectations as drivers of potential further upside.