(Sharecast News) - Bank of America Merrill Lynch highlighted JD Sports' "superior market position" in a research note on Wednesday, which it said is not reflected in the share price.
"JD Sports is the largest sports lifestyle retailer globally and, in our view, offers best-in-class growth at a compelling valuation (9x CY24E for a 14% EPS CAGR over FY24-27E)," it said.
"In addition, we think JD's drive to improve governance and investor communication over the past year should also attract a wider pool of capital."
The bank noted that JD Sports has underperformed its wider sportswear and retail coverage since August, which it sees as "an enhanced opportunity" to own shares.
BofA, which maintained its 'buy' rating and 233p price target on the stock, said it remains confident the retailer can achieve its pre-tax profit and store rollout targets in FY24.
It said JD has "several levers" to drive revenue and earnings growth.
"We see JD's attractive route-to-market for brand partners and modern experience for consumers as its moat to sustain a higher like-for-like growth profile than peers," it said.
BofA pointed out that the retailer aims to more than double its JD-fascia store count over the next five years, with the US making up around 40% of new stores.
The bank also said it sees scope for small- to mid-size deals and minority take-outs to complement its organic growth forecasts.
At 1255 GMT, the shares were up 3% at 149p, having jumped on Tuesday after US peer Dick's Sporting Goods lifted its outlook.