Poundland rises as Deutsche Bank upgrades to buy

Poundland shares surged after Deutsche Bank upgraded the company from ‘hold’ to ‘buy’ - a move it said was controversial - but cut its price target from 200p to 180p.

It said the company has had a challenging start to the year, but believed the company can help itself to offset the challenges it faces.

It also noted consensus earnings for the year to the end of March have fallen by 40%, due to weak sales and the 99p Stores business.

“We have little expectation that like for like sales trends will improve in the near-term, so operational deleverage risks remain.”

However, Deutsche Bank did see two years of “exceptionally strong” earnings growth, and believed positive catalysts from the company’s multi-price trials in the UK could alleviate concerns about the business model.

Shares in Poundland had risen 4.13p (2.85%) to 149.33p at 1523 GMT.

Deutsche Bank also upgraded Carpetright from ‘hold’ to ‘buy’, but cut WH Smith from ‘buy’ to ‘hold’.