Broker snap: Morrisons shares up on Citigroup upgrade

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LONDON (ShareCast) - Morrison Supermarket's shares jumped Tuesday after Citigroup (NYSE: C - news) raised its recommendation from 'neutral' to 'buy'.

The broker said the company has the strongest economic model of the three listed UK supermarkets, with a higher combination of asset turn and margin.

"Over the long-term we think Morrisons is well positioned to extend [this model] to southern England where it remains under-represented," the analyst said, lifting its target price to 325p from 280p.

Morrisons' shares have underperformed the FTSE by 20%, Tesco (Other OTC: TSCDY - news) by 22% and Sainsbury (LSE: SBRY.L - news) by 31% over the past year as concerns have grown over falling revenues.

Earlier this month the grocer reported its first annual profit decline in six years.

Morrisons has been working on a strategy to improve sales by launching a shopping website and opening more convenience stores.

While analysts have been sceptical over Morrisons earnings outlook, Citi said it sees near-term scope for trading recovery and limited scope for a profit warning in the short run.

However, if trading momentum remains poor until the publication of the Kantar grocery market survey on July 16th, then Citi will review its 'buy' rating on the stock.

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