While Credit Suisse has labelled Sainsbury's third-quarter performance as 'robust', the broker decided to take a more cautious view for the supermarket's outlook for 2013/14.

An 'underperform' rating and 285p target price for the shares has been maintained.

The company's third-quarter like-for-like (LFL) sales (excluding fuel and including VAT) rose by 0.9% which "demonstrated once again that Sainsbury's business has held-up well despite the very tough trading conditions of 2012/13," Credit Suisse said.

"We are not revising our 2012/13 estimates which, in the context of the tough market and recent negative revisions to UK peers, we consider a very solid result.

"But, for outer-years, we are now taking a slightly more cautious view. Given both the CEO's view that the current trend of negative volumes has maybe another year to run and Sainsbury's slower Q3 growth, we think it now prudent to cut our 2013/14E LFL assumptions - to +1%, from +2.5%."

The broker has also said that it does not expect Sainsbury to deliver its medium-term margin estimate of +10-20 basis points per annum.

Overall, Credit Suisse's forecasts have been reduced by 2-3% for 2013/14 and by over 5% for 2014/15.

"In our view, robust sales alone continue to not be enough to drive the shares higher. Sainsbury's 'recovery' story has always required margin growth and Returns improvement to accompany LFL growth. While there has been some improvement in the former, our future year estimates now suggest little continuation, which means near-term returns upside is likely to remain elusive."

Shares were down 0.75% at 326.74p by 10:58.

BC

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