Analysts at Liberum raised their target price on greeting cards retailer Card Factory from 110.0p to 135.0p on Wednesday, stating the start of an upgrade cycle had set the group apart as “a top pick”.
Liberum said Card Factory’s Tuesday trading statement led it to raise full-year 2023 pre-tax profit estimates by 32% – with half driven by “better trading” so far in H2, and half from one-off benefits.
The analysts noted that new guidance took “a cautious view” on Christmas, and also acknowledged that Omicron’s impact in 2021 meant there was scope to recoup “lost” prior year sales.
“With incremental sales dropping through at a 33% margin, this means upgraded guidance could still very well be beaten. We forecast FY24E FCF of £24.0m (vs. a pre-Covid five-year av. of £61.0m), implying a 12% yield. On a CY23 PER 6.2x and EV/EBITDA 3.5x the shares remain very cheap. CARD remains firmly a top pick,” said Liberum.
“The board now believes that EBITDA for FY23E y/e Jan) will be at least £96.0m versus current consensus of £88.8m. This EBITDA would approximate to PBT of £37.5m, which compares to the current consensus of £29.3m.”
Reporting by Iain Gilbert at Sharecast.com
