Berenberg raises target price on JD Sports

Analysts at Berenberg raised their target price on footwear retailer JD Sports from 900.0p to 975.0p on Wednesday, stating the self-styled "King of Trainers" had built itself a worthy palace with its most recent acquisition.

JD Sports completed its acquisition of US sports lifestyle retailer Shoe Palace on Tuesday and Berenberg noted that while JD's recent approach of Debenhams weighed on sentiment, this was a deal that investors would like.

"Shoe Palace is a high-quality, complementary business, which strengthens JD's position in the US market and further increases its relevance to consumers and brands," said the analysts.

The German bank, which kept its 'buy' rating on the stock in place, stated that on conservative assumptions, the roughly £510.0m deal valued Shoe Palace on an attractive 13x enterprise value to earnings before interest and taxes ratio and added that it was roughly 3% accretive to earnings, with further scope to enhance performance and profitability.

"This is a great example of how JD will leverage its strong balance sheet to consolidate the market and create value. We raise our earnings forecasts circa 8% to capture this deal and stronger underlying trading, and increase our price target to 975p," said Berenberg, which added that JD remained one of its top picks in the sector.