Goldman Sachs has cut its investment rating on Morrisons (LON:MRW) to 'sell' from 'neutral', following a 34 per cent rise in the share price since the beginning of the year and believing the current valuation does not reflect the market risks faced by the supermarket chain.
The broker said: "Though we continue to believe Morrisons should be rewarded for its commitment to price investments, cost cutting and cash generation, we believe this is more than reflected in the stock price and see no room in consensus for the worsening conditions we forecast in the UK grocery market.
"We do not expect a negative surprise at 1H17 results on September 15, but, given the stock's recent outperformance (in the last month (YTD in brackets) MRW +10% (+34%), SBRY +8% (-6%), TSCO +2% (+10%)), we believe the stock is already reflecting this."
Analysts have trimmed their target price to 175 pence per share (from 180 pence), implying 13 per cent potential downside.
At 2:37pm: (LON:MRW) Morrison Wm Supermarkets PLC share price was +0.55p at 197.55p