JD Sports is a 'clear buy' for Peel Hunt as Finish Line crossed

Peel Hunt feels that, in a world where brands are increasingly going for "direct to consumer" sales models, relationships with players like Nike and Adidas aren't just important, they are "life and death" and that while industry sales growth has remained solid, direct to consumer targets have meant that something has to give with retailers.

However, analysts Jonathan Pritchard and John Stevenson said that JD was perceived as a "hot" format, which the big brands hope it can use to "breathe some life" into the somewhat subdued Finish Line, even if it takes time.

They see Finish Line as a crucial piece in JD's "global jigsaw", especially having travelled over to the US to look at some of the Finish Line stores and been "excited" by what they discovered.

"The flagship stores have access to some crucial lines, but not enough, and staff densities could be better: JD is buying a business that could generate much higher sales and EBIT densities if it improved some retail basics," the analysts said.

JD Sports shares are a "clear buy", the pair said, noting that while UK retailers had failed in the US before, JD will bring "financial clout and deeper brand relationships" to a workable store portfolio that is seen as likely to succeed Stateside.

"The shares don’t reflect that," they said as they upped JD's target price to 525p from 500p.