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Investing.com-- British retailer J Sainsbury Plc (LON:SBRY) announced on Sunday that it has ended discussions with China’s JD.com regarding the potential sale of its Argos unit, sending shares up 4% on Monday.
Sainsbury’s stated that JD.com proposed a "materially revised set of terms and commitments" that were not in the best interests of its shareholders, employees, or broader stakeholders.
JPMorgan flagged Sainsbury’s strategic positioning, emphasizing its rational market environment, strong capital returns, and an overall appealing setup for the stock, with potential earnings and valuation upside.
The brokerage noted that while these factors also apply to competitor Tesco, Sainsbury’s has not fully reflected its valuation discount, largely due to the Argos segment.
Despite Argos contributing modestly to earnings and free cash flow, JPMorgan sees this as an opportunity for growth.
The brokerage upgraded its 1H EBIT estimates by approximately 6.5% and FY26 estimates by 5.5%, placing the stock on Positive Catalyst Watch ahead of the 1H26 earnings report scheduled for November 6.
Sainsbury’s reaffirmed its guidance for the 2025/26 financial year, expecting a retail underlying operating profit of around £1 billion and free cash flow exceeding £500 million.