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Broker Tips: JD Sports Fashion, ITM Power, Dunelm

  • Citigroup initiate JD Sports Fashion coverage with ‘Buy’ rating
  • Berenberg lowers target price for ITM Power
  • RBC Capital upgrades Dunelm

Citigroup initiate JD Sports Fashion coverage with ‘Buy’ rating

Citigroup initiated coverage of JD Sports Fashion LON:JD. this week with a “Buy” rating and a target price of 220p. Citigroup anticipates that JD Sports’ greater geographic diversification compared to its peers will result in less sales volatility in the near term. The brokerage also sees a “significant opportunity” for the retailer to continue deploying its capital in the expansion of its premia fascia, which would generate returns above its weighted average cost of capital. According to LSEG data, 8 out of 13 analysts rate the stock as a ‘Buy’, with a median target price of 217.5p.

JD Sports Fashion shares were trading at 134.55p at the time of writing, up 3.74% this year and up 24.7% over the last 12 months.

Berenberg lowers target price for ITM Power

Berenberg has lowered its target price for AIM listed ITM Power LON:ITM from 90.0p to 80.0p this week and maintained its ‘Hold’ rating, noting it anticipates seeing slower than previously expected production scale-up. The German Bank commented it was taking “a more cautious” outlook on the company’s long-term manufacturing capacity build-out. There were some positives with the Bank suggesting that the business is on a “firmer footing” under new management but  improvements to the business model will “take time” to filter through to better financial performance.

ITM Power shares were trading at 62.52p today, down 35% this year and down 32.7% over the last 12 months.

RBC Capital upgrades Dunelm

RBC Capital has upgraded Dunelm LON:DNLM to ‘Sector perform’ from ‘Underperform’ and increased its target price to 1,100p from 1,000p this week. It noted that shares in the furniture retailer have fallen by around 15% over the last three months and as a result, suggested it is trading towards the lower end of its historical valuation range, commenting on the upgrade that “We view this as fair given Dunelm’s well-managed, cash generative model, albeit a relatively challenging outlook for home related sales.”

RBC had further positives for the retailer, noting “We think it has further strengthened its value positioning this year, by re-investing freight tailwinds into more than 1000 price reductions in Spring 2023. Given a still tough outlook for the UK consumer in 2024, we think consumers will remain focused on value, which should favour the likes of Dunelm,”

Dunelm shares were trading at 1036.5p today, up 4.6% this year and up 10.3% over the last 12 months.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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