Berenberg raises target price on DFS Furniture

Berenberg said DFS endured "difficult demand and cost conditions" throughout FY24, with both factors resulting in adjusted pre-tax profits of £10.5m being 68% below the midpoint of its initial full-year guidance.

"Trading conditions remain challenging, owing to both weakened demand and persistently high cost headwinds. These pressures are accompanied by increased competition for market share, which has been a significant driver of DFS's top-line growth historically," said Berenberg.

"We have lowered our earnings forecasts to reflect our revised view of end-market conditions in FY25E. We previously expected a stronger rebound after FY24, although the persistence of weak demand and the near-term outlook remaining difficult have resulted in a revision of this view. We now forecast volume growth of circa 1% year-on-year in FY25E and have lowered our group revenue forecast by circa 3% to reflect this change."

The German bank, which reiterated is 'buy' rating on the stock, added that DFS currently trades on a 13.4x 12-month forward price-to-earnings ratio, just over one standard deviation above its historical trailing average

Reporting by Iain Gilbert at Sharecast.com