Dixons Carphone 'potentially attractive turnaround story', says Barclays
Dixons Carphone rallied on Thursday as Barclays initiated coverage of the stock at ‘overweight’ with a 175p price target, arguing that it’s a "potentially attractive turnaround story".
Currys
61.65p
17:05 19/04/24
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
General Retailers
3,864.64
17:09 19/04/24
The bank said that while it accepts that turning around the group’s performance in the competitive mobile segment will be a slow and gradual process and Brexit may create some uncertainty, the company is implementing a sensible strategy.
"The new management team has been adamant that it has now secured more favourable terms and improved flexibility from all its mobile operators, while its £200mn cost-cutting target seems achievable as we believe there is low-hanging fruit in terms of cost savings through the completion of the integration process between Dixons and Carphone."
Barclays said Dixons’ increased focus on services, including credit, and online should lead to additional market share and a strengthening of its already-leading market share position.
"Overall, the medium-term operating margin of ‘at least’ 3.5% targeted by Dixons Carphone looks reasonable compared with the profitability level of peers in the sector (Fnac Darty’s operating margin was 4.0% last year)," it said.
At 1605 BST, the shares were up 4.7% at 144.90p.