The JB Hi-Fi Limited (ASX: JBH) share price has continued its positive run on Friday.
In morning trade, the retail giant's shares hit a new record high of $55.26.
The JB Hi-Fi share price has since pulled back a touch but remains up 3.5% to $54.86 at the time of writing.
Why is the JB Hi-Fi share price racing higher?
Investors have been bidding the JB Hi-Fi share price higher today after brokers responded positively to the retail giant's sales update.
That update revealed that business has been booming during the second half for JB Hi-Fi.
Management advised that for the period 1 January to 23 March 2022, it continued to see heightened customer demand and strong sales growth. This led to the JB Hi-Fi Australia business reporting total sales of 11.3% quarter to date, with both its New Zealand and The Good Guys businesses also reporting solid sales growth.
Morgans says buy JB Hi-Fi shares
One broker that was particularly impressed was Morgans. In response to the update, the broker retained its add rating and lifted its price target on the company's shares to $58.00.
Based on the current JB Hi-Fi share price, this implies potential upside of almost 6%. This increases to almost 11% if you include the $2.77 fully franked dividend the broker is forecasting in FY 2022.
Morgans was pleased with JB Hi-Fi's update and believes its shares are undervalued based on its current performance. It commented:
"JB Hi-Fi continues to experience strong sales growth driven by 'heightened customer demand'. Its latest trading update shows comparable sales growth accelerated in February and March, with JB Hi-Fi Australia particularly robust.
We have increased our comparable sales growth forecast at the group level by 200 bp from a decline of (0.3)% to positive growth of +1.7%. This, combined with higher margin estimates, pushes up our FY22 EBITDA forecast up by 5%.
We see JBH as a well-run retailer with good cost discipline, a robust balance sheet and a strong market position. We regard JBH as undervalued at current multiples despite its good sales momentum and reiterate our ADD rating."
