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Broker snap: Retailers on Nomura's shopping list
Thu, 09 Feb, 2012
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Broker snap: Retailers on Nomura's shopping list
Tue, 23 Feb 2010, 12:12:00
Nomura doesn't hold out much hope for the UK general retail sector in the months ahead, but thinks Debenhams and Marks & Spencer offer short-term trading opportunities. Retailers have underperformed over the past month, down 2.2% compared with a 0.3% decline in the FTSE All-Share. That's placed the sector at a P/E discount of 2.2% versus the UK market. "In our view, the sector will likely de-rate further from here, given limited earnings upgrades," said the Japanese broker. "We prefer to remain stock specific and continue to focus on restructuring, market share gain or strong cash generation." So, it plumps for Debenhams where it believe there exists a "significant" market share opportunity for the department store chain's womenswear through the launch of H! and Principles ranges. "With EPS growth of 16% forecast in FY10/11, while trading at a 25% discount to sector average, we believe Debenhams offers a short-term trading opportunity given current sector trends," it says. Marks & Spencer also gets the thumbs up as market share growth and self-help initiatives are beginning to improve, while 'foods & drink' growth has hit 90 basis points. "We therefore see a short-term opportunity in M&S given the pullback in valuation and the fact that forecasts for 2010/11 have started to be rebased downwards, and are now well anticipated by the market," thinks Nomura.
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