Dixons Carphone's improvements prompt Investec upgrade

The investment bank on Wednesday said that should drive medium term profit growth despite continued softness in the Nordics.

“Ongoing self-help and market share gains characterise the near-term story at a time when DC faces a slower electricals market,” it said.

“Significant downsizing of its portfolio will help strengthen the underlying proposition & UK margins in our view (INVe: +25bps).”

Investec said the company’s valuation doesn’t reflect the attractive investment case given.

“1) EPS growth from ongoing restructuring & market share gains (INVe: 12% EPS CAGR CY15-17e vs. 9% for the sector); 2) better visibility on CWS’ growth, scale and contribution to group profits; and 3) attention turning to uses of cash as FCF generation should improve markedly in FY18e.”

Shares in Dixons Carphone were up 3.2p (0.70%) at 1101 GMT to 459.7p.