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JB Hi-Fi Limited shares storm higher on broker upgrade

One of the best performers on the market today has been the JB Hi-Fi Limited (ASX: JBH) share price.

In morning trade the retailer’s shares are up 4.5% to $27.99 despite the market sinking notably lower.

Why are its shares higher today?

With no news out of the company, today’s gain is likely to be attributable to the release of a positive broker note out of investment bank Morgan Stanley.

According to the note, the broker has upgraded JB Hi-Fi to an overweight rating and placed it into its model portfolio in place of Aconex Ltd (ASX: ACX), which is currently subject to a takeover offer from Oracle.

Furthermore, the broker has lifted its price target on the company’s shares to a lofty $32.00. Even after today’s strong gain this still implies potential upside of over 14% for its shares.

Its analysts have made the move on “the expectation of solid trading and upside to earnings post-interim results”.

Investors appear to think that rival Harvey Norman Holdings Limited (ASX: HVN) may also be in the same boat. Its shares have managed to push higher today as well.

Should you buy JB Hi-Fi?

While JB Hi-Fi may provide some short-term gains if Christmas trading proves to be better than first feared, I certainly wouldn’t be a long-term holder of its shares.

The Amazon launch may have underwhelmed, but it is still very early days. The Australian site currently only has a fraction of the products available on its US site and lacks the popular Amazon Prime option.

But Amazon Prime is coming soon and I think Amazon’s assortment will grow significantly over the next couple of years. This could prove to be a big challenge for JB Hi-Fi and not one I’m willing to go along for the ride with.

Whereas these three growth shares could provide strong returns for shareholders over the long-term in my opinion.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended ACONEX FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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