Daily Management Review

Credit Suisse Bets Its Hope On Christmas Sale & Slashes Dixons Carphone Estimates


08/29/2017


The Suisse broker looks to benefit from the gaining momentum of the E.U. tech market.



The analysts at Credit Suisse brought down their stock target price to “280p” from “400p”, as they reiterated the outperformance rating on Dixons Carphones. They stuck to their “recommendation” due to the usual resilience of the “UK technologies market” clubbed with the fact that the mobile phone market in the Europe has recently picked up “momentum”.
 
Nevertheless, reported Digitallook, what the company failed to take into account was the festive Christmas season, whereby expectation have been fuelled due to the launch rumour of iPhone 8 in the month of September.
 
As the “sudden change of heart” occurred at Dixon in regard to the “impact” that it would have to face before the “European Union roam-like-at-home legislation”, the company revised and brought down its “pre-tax profits estimates”, whereby the drop was around “22%” over its “forecast horizon”. The company stated:
“A c.20% PBT guidance downgrade and rebase of last year's 'headline PBT' (which now excludes one-offs) coming less than two months after prelims at which management seemed relatively sanguine on UK profit prospects does not help confidence”.
 
Furthermore, Digitallook noted:
“Assuming Dixons can capitalise on its European momentum with improved growth in its top-line and higher profits from the continental market would leave them squarely in the middle of the company's guidance”.
 
However, the upside to all this is the recent drop in share price resulting in the “stock changing hands” to arrive at “6.5 times the company's forward price-to-earnings ratio”. This, to the company seemed cheaper when compared to the retails of the U.K. as well as “electrical peers”.
 
 
 
References:
www.digitallook.com







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