Frasers Group 'poised for European expansion', says Barclays
Frasers Group
613.50p
08:35 23/12/24
Barclays initiated coverage of Frasers Group on Tuesday with an ‘overweight’ rating and 1,060p price target, as it said the company was "poised for European expansion".
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Barclays pointed out that Nike’s chief financial officer recently mentioned Sports Direct alongside JD Sports and Dick’s Sporting Goods as key partners. He also noted the fact that the CEO of Adidas welcomed the company’s acquisition of SportScheck in Germany.
"Both of these comments reflect well on the elevation strategy under the leadership of CEO Michael Murray," it said.
"We are well aware of the concern over the Direct to Consumer (D2C) push from the major brands. However, we believe that there is a small winner’s circle of retailers that brands are prepared to back with high-quality products to help drive growth, as there are limits to D2C.
"We believe Frasers Group is well placed to fulfil this role for the brands in European sporting goods, just as JD Sports is doing in athleisure/sports fashion."
The bank also highlighted the medium-term potential in Financial Services.
"Whilst currently at an early stage, we believe the group’s nascent Financial Services division (via Frasers Plus) is an area of potential medium-term upside if it can be successfully introduced at the group’s existing brands, and potentially in other companies (eg, those where Frasers has a financial investment)," it said.
At 0955 GMT, the shares were up 0.3% at 883.50p.