Numis upgrades Currys, downgrades Next

Numis noted that the sector has rallied more than 40% from recent lows, outperforming the market by over 20% but said "this looks justified".

"Fears were unfounded and the backdrop has improved," it said.

"In updating our household cashflow, we note a better outturn to ’22 and outlook for ’23. The wallet for discretionary spending in 2023 looks to be circa 5% higher than looked likely, on an encouraging trajectory through the year.

"Whilst earnings expectations are yet to reflect this, sector valuation has recovered. Most boats have risen so far, but from here this demands a more selective approach to sector exposure."

Numis highlighted Dunelm and Frasers, and said it sees value in Inchcape and Lookers, all of which it rates at ‘buy’.

It remains negative on Kingfisher, cautious on Currys - albeit incrementally less so - and said the prospects at Marks & Spencer and B&M European Value were "balanced".

Numis lifted its price target on Currys to 65p from 45p, while Dunelm saw its price target upped to 1,450p from 1,350p. The broker hiked its price target on B&M to 470p from 440p and on Inchcape to 1,250p from 1,050p. The PT for sell-rated Kingfisher was increased to 165p from 150p, while the Lookers PT was raised to 140p from 125p.

Numis lifted its price target for Next to 7,000p from 6,700p and for hold-rated DFS Furniture to 150p from 135p. The price target for buy-rated Pets at Home was upped to 450p from 410p.

At 1020 GMT, Next shares were down 0.8% at 6,814p, while Currys shares were up 3.3% at 77.35p.