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(Sharecast News) - Analysts at Berenberg slightly raised their target price on retailer DFS Furniture from 110.0p to 120.0p on Friday as it said the market share competition was "heating up".
Berenberg said DFS endured "difficult demand and cost conditions" throughout FY24, with both factors resulting in adjusted pre-tax profits of 10.5m being 68% below the midpoint of its initial full-year guidance.
"Trading conditions remain challenging, owing to both weakened demand and persistently high cost headwinds. These pressures are accompanied by increased competition for market share, which has been a significant driver of DFS's top-line growth historically," said Berenberg.
"We have lowered our earnings forecasts to reflect our revised view of end-market conditions in FY25E. We previously expected a stronger rebound after FY24, although the persistence of weak demand and the near-term outlook remaining difficult have resulted in a revision of this view. We now forecast volume growth of circa 1% year-on-year in FY25E and have lowered our group revenue forecast by circa 3% to reflect this change."
The German bank, which reiterated is 'buy' rating on the stock, added that DFS currently trades on a 13.4x 12-month forward price-to-earnings ratio, just over one standard deviation above its historical trailing average
Reporting by Iain Gilbert at Sharecast.com
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