The JB Hi-Fi Limited (ASX: JBH) share price has continued its positive run on Friday.
In morning trade, the retail giant’s shares hit a new record high of $55.26.
The JB Hi-Fi share price has since pulled back a touch but remains up 3.5% to $54.86 at the time of writing.
Why is the JB Hi-Fi share price racing higher?
Investors have been bidding the JB Hi-Fi share price higher today after brokers responded positively to the retail giant’s sales update.
That update revealed that business has been booming during the second half for JB Hi-Fi.
Management advised that for the period 1 January to 23 March 2022, it continued to see heightened customer demand and strong sales growth. This led to the JB Hi-Fi Australia business reporting total sales of 11.3% quarter to date, with both its New Zealand and The Good Guys businesses also reporting solid sales growth.
Morgans says buy JB Hi-Fi shares
One broker that was particularly impressed was Morgans. In response to the update, the broker retained its add rating and lifted its price target on the company’s shares to $58.00.
Based on the current JB Hi-Fi share price, this implies potential upside of almost 6%. This increases to almost 11% if you include the $2.77 fully franked dividend the broker is forecasting in FY 2022.
Morgans was pleased with JB Hi-Fi’s update and believes its shares are undervalued based on its current performance. It commented:
“JB Hi-Fi continues to experience strong sales growth driven by ‘heightened customer demand’. Its latest trading update shows comparable sales growth accelerated in February and March, with JB Hi-Fi Australia particularly robust.
We have increased our comparable sales growth forecast at the group level by 200 bp from a decline of (0.3)% to positive growth of +1.7%. This, combined with higher margin estimates, pushes up our FY22 EBITDA forecast up by 5%.
We see JBH as a well-run retailer with good cost discipline, a robust balance sheet and a strong market position. We regard JBH as undervalued at current multiples despite its good sales momentum and reiterate our ADD rating.”
The post Top broker says JB Hi-Fi (ASX:JBH) shares are ‘undervalued’ appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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