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Dec. 3, 2020, 9:25 a.m. EST

Sainsbury shares climb while Morrisons is steady, following plan to surrender tax relief

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By Steve Goldstein

Investors had a mixed response to news that both Morrison Supermarkets and J Sainsbury would give back tax relief from the U.K. government.

Morrisons /zigman2/quotes/205533138/delayed UK:MRW +0.69% late on Wednesday said it will repay £274 million, and Sainsbury /zigman2/quotes/206038250/delayed UK:SBRY +0.84% on Thursday said it will repay £410 million. Morrisons’ shares were flat while Sainsbury rose 4%.

Both supermarket operators were following the lead of Tesco /zigman2/quotes/203761082/delayed UK:TSCO +0.08% , which on Wednesday had announced it would repay £585 million.

Including the decisions by Asda and Aldi UK, the U.K. supermarkets have given up more than £1.7 billion ($2.3 billion) in tax relief, according to Sky News.

UBS said Sainsbury’s guidance that it expects underlying pretax earnings of at least £270 million implies a stronger-than-forecast £680 million excluding the rates relief, which is about £40 million stronger than consensus expectations. Sainsbury also said it would give priority to payments of dividends over net debt reduction, while Morrisons declared a special dividend.

Analysts at JPMorgan Cazenove downgraded Morrison to underweight from neutral and cut its price target to 160 pence from 175 pence. “We see momentum slowing down combined with little further self-help,” the broker said. They found it “worrying” that Morrison’s earnings before interest and tax was almost flat excluding business rates relief and COVID-19 costs.

The broader FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.41% edged up 0.3% in afternoon trade.

Flutter Entertainment /zigman2/quotes/208882914/delayed UK:FLTR +0.56% shot up 11% on its plan to buy a 37% stake in FanDuel for $4.2 billion, which it said implied a 40% discount to the valuation on rival U.S. sports-betting group DraftKings /zigman2/quotes/213120645/composite DKNG +3.68% .

Defensive-oriented stocks struggled, with pharmaceutical companies AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN -1.00% and GlaxoSmithKline /zigman2/quotes/200381158/delayed UK:GSK -2.17% and consumer goods company Unilever /zigman2/quotes/205449809/delayed UK:ULVR -0.64% all lower. UBS downgraded GlaxoSmithKline to neutral, while AstraZeneca’s COVID-19 vaccine is unlikely to get emergency U.S. approval before late January, according to the head of U.S. government’s Operation Warp Speed.

/zigman2/quotes/205533138/delayed
UK : U.K.: London
182.35 p
+1.25 +0.69%
Volume: 5.89M
Jan. 20, 2021 4:35p
P/E Ratio
16.76
Dividend Yield
3.77%
Market Cap
£4.35 billion
Rev. per Employee
N/A
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/zigman2/quotes/206038250/delayed
UK : U.K.: London
240.20 p
+2.00 +0.84%
Volume: 5.54M
Jan. 20, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
4.37%
Market Cap
£5.28 billion
Rev. per Employee
N/A
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/zigman2/quotes/203761082/delayed
UK : U.K.: London
242.30 p
+0.20 +0.08%
Volume: 12.96M
Jan. 20, 2021 4:35p
P/E Ratio
21.40
Dividend Yield
4.00%
Market Cap
£23.71 billion
Rev. per Employee
£157,770
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,740.39
+27.44 +0.41%
Volume: 678,050
Jan. 20, 2021 4:58p
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/zigman2/quotes/208882914/delayed
UK : U.K.: London
14,480.00 p
+80.00 +0.56%
Volume: 442,007
Jan. 20, 2021 4:35p
P/E Ratio
143.08
Dividend Yield
0.00%
Market Cap
£25.20 billion
Rev. per Employee
£233,803
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/zigman2/quotes/213120645/composite
US : U.S.: Nasdaq
$ 53.18
+1.89 +3.68%
Volume: 11.48M
Jan. 20, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$40.25 billion
Rev. per Employee
N/A
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/zigman2/quotes/203048482/delayed
UK : U.K.: London
7,645.00 p
-77.00 -1.00%
Volume: 1.95M
Jan. 20, 2021 4:35p
P/E Ratio
51.09
Dividend Yield
2.83%
Market Cap
£101.36 billion
Rev. per Employee
£270,731
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/zigman2/quotes/200381158/delayed
UK : U.K.: London
1,379.80 p
-30.60 -2.17%
Volume: 9.19M
Jan. 20, 2021 4:35p
P/E Ratio
10.88
Dividend Yield
5.80%
Market Cap
£70.42 billion
Rev. per Employee
£339,451
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/zigman2/quotes/205449809/delayed
UK : U.K.: London
4,353.00 p
-28.00 -0.64%
Volume: 2.42M
Jan. 20, 2021 4:35p
P/E Ratio
22.08
Dividend Yield
3.34%
Market Cap
£115.00 billion
Rev. per Employee
£304,295
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