Canaccord bumps Halfords up to 'buy', sees return to positive momentum

The brokerage said that after six years of not really going anywhere, FY19 should see a return to positive momentum, with earnings per share growth of 14%, followed by 10% in FY20 and risks to the upside.

"We take heart from Halfords' ability to drive Q3 like-for-like volume growth in bikes even as its prices go up 6-7% (versus the market up 10-15% and down on volumes). We think that this dynamic should lead to margin expansion in FY19E and beyond, even taking account of product mix."

Canaccord said that while it's impossible to be precise on the quantum, given that management will react to market conditions, its analysis of the market and peers suggests Halford is well placed to keep taking share.

Halfords said on Thursday that third-quarter sales rose as it reported solid trading over the Christmas period. In the 15 weeks to 12 January, total group revenue was up 3.2%, with retail sales 3.3% higher and Autocentres sales up 1.9%. On a LFL basis, group revenue rose 2.7%, with retail revenues up 2.9% and revenue from Autocentres up 0.7%.

Service-related retail sales were especially strong, up 8.6%, driven by the fitting of bulbs, blades, batteries and dash cams, new motoring services and cycle repair.

At 1550 GMT, the shares were down 0.7% to 348.40p.