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Broker tips: DFS Furniture, Ferrexpo

By Iain Gilbert

Date: Wednesday 15 Jul 2020

Broker tips: DFS Furniture, Ferrexpo

(Sharecast News) - Analysts at Berenberg hiked their target price on retailer DFS Furniture from 175.0pto 210.0p after hosting a fireside chat with chief executive Tim Stacey and chief financial officer Mike Schmidt.
Berenberg, which also reiterated its 'buy' rating on the company, said its chat with DFS' top brass saw management remain cautious about the economic outlook for the group as a result of the Covid-19 pandemic but the bank itself thinks the speed at which the company returned to growth after the global financial crisis was a good sign of things to come.

While the German bank said it may be "prudent" to run at lower levels of gearing in future, its forecasts showed DFS returning to leverage of 1.1x in the 2022 trading year and a dividend yield of 4% in the 2020 calendar year.

Berenberg did reduce its full-year underlying earnings estimates for 2021 and 2022 by 2% and 6%, respectively, but said the increase to its target price was justified by the group's recent capital raise and the resulting reduction in risks to its balance sheet risk.

The analysts added that its new target price implied a 12% free cash flow yield for 2021.

JPMorgan Cazenove downgraded its stance on shares of iron ore company Ferrexpo to 'underweight' from 'neutral' on Wednesday following the recent rise in the share price, as it took a look at the metals and mining sector.

JPM, which lifted its price target on the stock to 150p from 130p, pointed to valuation and the risk of lower iron ore prices in the second half and 2021 following an 80% jump in the share price since March.

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