Liberum upgrades Card Factory, highlights Asos and UK election fallout
With the retail sector now at a major strategic crossroads, investors should back companies that are best prepared for a world where data will be the new frontier, said Liberum, picking out several 'key long-term winners' including Asos, Joules and Ted Baker.
ASOS
344.00p
16:49 26/04/24
B&M European Value Retail S.A. (DI)
527.80p
16:40 26/04/24
Card Factory
98.80p
16:49 26/04/24
Currys
61.75p
16:40 26/04/24
DJ EURO STOXX 50
5,006.85
23:58 26/04/24
Food & Drug Retailers
3,956.27
16:59 26/04/24
Frasers Group
796.00p
16:40 26/04/24
FTSE 100
8,139.83
17:09 26/04/24
FTSE 250
19,824.16
16:59 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE AIM 100
3,637.40
17:14 26/04/24
FTSE AIM 50
3,960.47
17:14 26/04/24
FTSE AIM All-Share
755.28
17:14 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
FTSE Small Cap
6,484.28
16:59 26/04/24
General Retailers
3,910.25
16:59 26/04/24
IBEX 35
11,154.60
18:44 26/04/24
Industria de Diseno Textil - Inditex
€45.34
18:15 26/04/24
Jimmy Choo
230.00p
16:30 30/10/17
Joules Group
9.22p
16:40 11/11/22
Marks & Spencer Group
261.50p
16:49 26/04/24
McColl's Retail Group
1.68p
17:30 11/04/24
Personal Goods
16,042.55
16:59 26/04/24
Pets at Home Group
286.60p
16:35 26/04/24
Superdry
7.49p
16:49 26/04/24
Ted Baker
109.80p
16:40 20/10/22
After an average 13% de-rating for FTSE 350 retailers in the first three months of the year and Liberum said re-rating potential in the sector is "likely to be limited" in the second and third quarters, except where stocks have already been punished in light of their fundamentals.
Following the snap election news on Tuesday, Liberum said the 8 June ballot could bring positive catalysts.
"It could provide the government with a strong mandate to execute a smoother and softer Brexit. Consequently this would be positive for UK domestics which could find themselves in favour again."
Liberum, which also highlighted 'buy' ratings for B&M European Value Retail, Dixons Carphone, Jimmy Choo, Joules, Inditex and McColl’s, said retailers needed to invest in a broad range of areas to remain competitive, such as focusing on mobile, hybrid warehouses and digital payments.
After a revisiting of its fundamentals, Card Factory was also upgraded to 'buy' from 'hold' and the target price increase to 345p from 275p, with significant scope seen for continued store roll-out over the long-term.
Sports Direct, on the other hand, was downgraded to 'hold' from 'buy' (target price 310p) after forecasts were cut materially reflecting currency pressures and a lack of clarity on outlook.
The onset of the EU's Global Data Protection Regulation from 25 May next year, which is designed to enable individuals to better control their personal data, will "cause a seismic shift" in the way companies are allowed to market, sell and communicate with consumers.
"We see those with the right systems in place adhering to the regulation, using it as a positive catalyst to flourish," Liberum said, with Asos singled out as a stand-out leader (target price 6,400p) but SuperGroup leaving disappointing with its "relatively singular focus" .
Despite longer-term caution, SuperGroup was still maintained at a 'buy' rating (target price 1,750p) due to its shorter-term trading momentum.
While Halfords’ improved momentum has seen its forecasts and target price raised, a 'sell' rating was kept due to the subdued growth outlook. Marks & Spencer and Pets at Home also remained at 'sell'.