Peel Hunt downgrades Card Factory on lack of positive catalysts

Analysts at Peel Hunt downgraded their recommendation for shares of Card Factory, pointing to the 0.7% drop in company's like-for-like sales over the first half of the year and the lack of any guidance for an improvement from management as the key reasons for the change.

The former meant that, together with higher costs, the broker now expected Card Factory's full-year earnings before interest, taxes, depreciation and amortisation to be lower, a £89.0m.

Indeed, were it not for the strong performance from the company's website - which was only marginally profitable - in the second quarter, then the total sales would have been even weaker, Peel Hunt said.

As well, the analysts said, "clearly management does not see much of a pick-up from the slightly negative picture in H2.

"[...] There is no sign of the negative forecast momentum relenting, and we see little reason to hold the shares even if the special dividend is confirmed as set to be paid in H2."

Peel Hunt lowered its recommendation from 'hold' to 'reduce', setting a target price of 180.0p.