Citi starts Coats Group at 'buy'

Citi has initiated coverage of Coats Group, a supplier and manufacturer of sewing thread and zips and fasteners, with a 'buy' rating and 109p price target.

The bank noted that one in five garments worldwide is constructed using Coats thread.

"We see opportunities for the company to take share in a constantly adapting apparel & footwear market and separately become the global market leader in the fragmented specialty thread market."

Citi added that the stock's valuation is low and fails to reflect a stabilised core business with growth optionality.

Coats Group said in its half-year results last month that its full-year performance was expected to be "slightly ahead" of management's expectations as its Connecting for Growth programme delivered benefits faster than expected.

It said at the time that first-half adjusted operating profit rose 13% to $100m, while basic earnings per share were 19% higher and revenue increased 7% to $788m.

At 1235 BST, the shares were up 2% to 83.20p.