Deutsche Bank raises target price on B&M

Deutsche Bank said B&M management "came out fighting" with regards to the acceleration in like-for-like trading, "robust" cost management continuing and the recovery in gross margins in the second half of 2022.

However, DB noted that B&M's shares had been marked down by roughly 5% in a strong market as it chose to ignore "some of the big elephants in the room" relating to the 2024 trading year - including utility and other cost pressure and the hedged rates on FX and freight and when these roll off.

"In the short term we think the sales and margin trajectory appear robust as we head into peak and we raise our adjusted EBITDA by 8% to £561.0m and back into their maintained guidance range (£550.0m-600.0m)," said the analysts, who stood by their 'hold' rating on the stock.

"This higher base sees a flowthrough into FY24e but only sees a circa 3% upgrade to £495.0m (from £479.0m) as we think the better-than-expected gross margin achieved in FY23e will see a deferral of pressure into FY24e although we remain circa -10% below consensus."

Reporting by Iain Gilbert at Sharecast.com