Investors have been snapping up shares in supermarket group Wm Morrison in a belated reaction to yesterday's news of its market share gains.
According to TNS Worldpanel Morrisons' share grew to 11.5% in January from 11% a year ago. Helped by a positive note this morning from Morgan Stanley, Morrisons shares are 8.5p higher at 301.5p.
The bank has raised its price target from 310p to 330p and its rating from equalweight to overweight.
It said: "Morrisons' problems are much less deep-rooted than Sainsbury's and stem almost entirely from the ill-executed merger with Safeway. Although the business had been stabilised before his arrival, we view the Morrisons recovery story as starting only with the arrival of Marc Bolland as chief executive in late 2006.
"In our view, the Morrisons recovery story is at a much earlier stage than that of Sainsbury's and remains ripe with 'low-hanging fruit'.
"We believe that Morrisons has a consumer perception problem in the south of England, which should be relatively easy to fix and should significantly boost sales densities.
"Morrisons' systems and operating procedures are antiquated. As they are modernised over the next 2-3 years, the group's cost base should come more into line with competitors.
"Morrisons may look expensive today, but if it achieves our forecasts, it won't do so for long."
A positive note from Deutsche Bank was responsible for a 11.75p rise to 347.25p in WH Smith. Deutsche raised its price target from 370p to 385p.
Retailers were also lifted by news of a 1.2% annual rise in shop price inflation in January, according to the British Retail Consortium, compared to 1% in December.
Overall the market was fairly unsettled this morning, with miners lower after falling metal prices and disappointing results from BHP Billiton, not to mention its hostile bid for Rio Tinto. BHP is now down 83p to £15.14.
But British Energy added 13.5p to 506p as it said it was talking to ten possible partners about building new nuclear plants.
