Broker tips: JD Sports, Tullow Oil, EnQuest, Capricorn Energy, Pharos Energy

As a result of milder autumn weather and heavier discounting over the peak holiday shopping season, full-year gross margins are expected to be slightly lower than last year, leading the company to lower its adjusted pre-tax profit guidance for the 12 months to 3 February to £915-935m, from £1.04bn at the half-year stage.

Constant currency organic revenue growth was just 6% in the 22 weeks to 30 December, down from 12% in the first half. For the full year, organic revenue growth is expected to come in at 8%.

"At the midpoint, this marks a notable 15% cut to our FY24 forecast on a stock where the market was not showing strong confidence in consensus expectations (11% cut to consensus)," Shore Capital said. "The group speak to 'good progress' against its five-year strategic plan, but the market has taken its toll on the share price with this news," the broker said, with the stock down 23% in afternoon trade at 119.35p.

Shore Capital said it still sees "a lot to like in JD", not least its balance sheet, but noted that confidence in earnings estimates was a pre-condition of a positive equity case.

Jefferies has downgraded its ratings for UK-listed oil and gas peers Tullow Oil, EnQuest, Capricorn Energy, and Pharos Energy as part of its review of the sector on Thursday.

"Bottom-up review of International E&P operational delivery, shareholder returns, growth strategy, and executive management tenure allows us to establish the stocks we see as having the strategic vision, capability, and capital to deliver market-beating equity returns in the future," Jefferies said in a research note.

However, the broker reviewed its recommendations for those stocks where it sees growth and returns as "constrained".

Tullow Oil was now rated 'underperform', while EnQuest, Capricorn Energy, and Pharos Energy were rated 'hold', with target prices on all being slashed by 20% to 30%.

"EnQuest (cut to 'hold') has delivered production to guidance in both 2022 and 2023 but on declining volumes and, overall the stock is down with no direct shareholder return to offset," Jefferies said.

"Onshore Egypt, growth for both Capricorn Energy and Pharos Energy is restricted by receivables (cut to 'hold') and offshore Ghana, Tullow Oil growth is limited as excess capital is used to deleverage, rather than growth (cut to 'underperform')."