The JB Hi-Fi Limited (ASX: JBH) share price is outpacing its peers today after a leading broker upgraded its shares.
Shares in the ASX retailer jumped 3.3% to $50.04 in morning trade. This makes it the fifth best performer on the S&P/ASX 200 Index (Index:^AXJO).
The JB Hi-Fi share price is also beating its rivals. The Super Retail Group Ltd (ASX: SUL) share price added 0.4%, Harvey Norman Holdings Limited (ASX: HVN) share price inched up 0.2%, and Wesfarmers Ltd (ASX: WES) share price fell 0.5%.
Image source: Getty Images
JB Hi-Fi share price upgraded despite sales drop
The outperformance of JB Hi-Fi coincided with Macquarie Group Ltd's (ASX: MQG) decision to upgrade the shares to "outperform" from "neutral".
The broker's renewed enthusiasm for its ASX shares comes even after JB Hi-Fi reported a drop in first quarter sales.
The sales decline was due to the lockdowns in Victoria and New South Wales – it's two largest markets. This meant that more than half of JB Hi-Fi and The Good Guys stores had to shutter.
Emerging signs of a sales rebound
But the news isn't quite as bad as the headline figure might suggest.
"JBH Aus comp sales for 1Q are tracking -7.9% below pcp, but substantially above pre-COVID levels, +17.3% on a 2yr basis," said Macquarie.
"Importantly, comp sales have improved since the last update to 15-Aug."
JB Hi-Fi Australian stores saw a 1.1% decline in sales in the second half of the quarter. This compares with a close to 15% drop between 1 July to 15 August.
Big uplift in electronics purchases
What's more, Macquarie's proprietary credit card spending data provides an additional reason to get excited about the JB Hi-Fi share price.
"Purchases through consumer electronics retailers across the Macquarie Credit Card dataset have rebounded sharply over September and October," noted the broker.
"Kitchen Appliances also look to have rebounded, which bodes well for The Good Guys."
Good news for Christmas shopping season
Further, the easing of lockdown restrictions in NSW and Victoria will likely give Christmas shopping season a boost.
Given that international travel still looks like a risky affair, stuck-at-home consumers will have extra cash to spend on material items too.
How much is the JB Hi-Fi share price worth?
However, Macquarie warns of a few risk factors that could derail its bullish thesis. Supply chain disruptions that have caused a shortage of stock could negatively impact on the retailer.
There is also uncertainty on whether consumers will keep snapping up electronic products in the next phase of the COVID-19 pandemic.
Macquarie's 12-month price target on the JB Hi-Fi share price is $52.50 a share.
