Deutsche Bank slashes Carpetright target price after profit warning

Deutsche Bank has taken an axe to its price target for Carpetright following the flooring specialist's profit warning on Friday.

The bank more than halved its price target on the hold-rated stock to 95p from 200p, saying the sharp downturn in recent trade sparks concerns about the consumer outlook.

"The sharp slowdown seems to be due to consumer footfall and conversion, rather than competitive pressures or other factors, DB said.

"It is the macro environment which causes us to cut FY Apr-18 adjusted profit before tax from £13.8m to £4.5m (within the new guided range of £2m-£6m) and FY Apr-19 adjusted PBT from £16.9m to £0.6m.

"Capacity increase/withdrawal may well be affected by the shape of trading in the coming months, so the silver lining from a tougher macro could be market share gains for Carpetright."

Last week, Carpetright shares slumped after the company warned on profits and said trading in its important post-Christmas period was "significantly behind expectations".

It slashed full-year profit guidance to £2m to £6m, after waring in December that underlying full-year pre-tax profits would be at the lower end of £13.8m to £16.7m. Like-for-like sales fell 3.6% in the 11 weeks to January 13, with a decrease of 1.4% in flooring, and a further material decrease in bed sales.

At 1500 GMT, Carpetright shares were down 1.9% to 97.74p.