JP Morgan sees no upside at B&M after 'unexciting' first half

dl b and m bm b — B&M BargainsCompany photo / B&M European Value Retail

JP Morgan has reiterated an 'underweight' rating and 550p target price for discount retailer B&M European Retail after an "unexciting" set of first-half results last week.

B&M European Value Retail S.A. (DI)

393.20p

17:15 04/11/24

0.28%

1.10p

The company reported on 9 November that group revenues totalled £2.55bn in the six months to 23 September, up 10.4% on last year, while adjusted EBITDA was up 16.1% at £269m, with margins rising by 50 basis points to 10.5%.

JP Morgan said the profit figure was about 5% below forecasts, driven by weaker-than-expected results in the UK on the back of higher operating expenditure.

However, B&M lifted its adjusted EBITDA guidance to £620m-630m, "materially higher" than last year's £573m, the company said.

"Whilst we believe B&M might be able to deliver on its upgraded FY24 outlook via higher gross margins, we think its update failed to excite investors, particularly relative to some other UK general retailers and grocers," JP Morgan analyst Borja Olcese said.

The bank's 550p target price suggests very little upside to Thursday's 538.40p level, down 2.2% on the day.