Card Factory boosted by upgrade to 'hold' at Peel Hunt

Card Factory got a boost on Wednesday as Peel Hunt upgraded its stance on shares of the greeting card retailer to ‘hold’ from ‘sell’.

"Forecast momentum has been negative, to the extent that the ordinary dividend will be cut at the prelims, in addition to the demise of the special," it said, adding that the downgrade after the "botched" Christmas trading season was "a major kitchen-sinking".

"We would have to make very dark assumptions to see CF miss the new EBITDA range, but the valuation assumes further catastrophe," it said.

Peel said that Card Factory is fundamentally a good, market-leading business.

"Strategically and tactically, this hasn’t been a vintage few years, but the price-to-earnings should not equal the yield. We move from sell to hold."

The broker has a 100p price target on the stock.

At 13-00 GMT, shares were up 4.7% at 93.35p.

Shares of Card Factory tumbled early in January after it issued a profit warning on the back of "challenging" Christmas trading.

The company said at the time that FY20 adjusted underlying earnings before interest, tax, depreciation and amortisation were expected to be between £81m and £83m, down from £89.4m last year.

For 2021, it said the net impact of market headwinds on earnings was likely to be in the range of £5m to £10m, with declining high street footfall, depressed sterling valuation and high cost inflation set to remain a drag.