Analysts at Berenberg raised their target price on pet supplies retailer Pets at Home from 540.0p to 570.0p on Wednesday following the firm’s first-quarter update back in July.
Berenberg highlighted that Pets at Home’s first-quarter update revealed revenue had grown much faster than even the most bullish predictions had anticipated.
The German bank, which reiterated its ‘buy’ rating on the stock, also pointed out that Pets at Home upgraded profit guidance to the top end of prior guidance in its update last month.
However, Berenberg stated the market reaction since had been muted, saying it can only assume investors may have anticipated a bigger upgrade.
“We feel this is missing the wood for the trees at this early stage of the year, and outline how the company could deliver pre-tax profit of as much as £160.0m this year (although our base-case estimates are more conservative for the time being),” said Berenberg.
Deutsche Bank initiated coverage on the European clothing sector on Wednesday, with a preference for “growth companies which have adapted to changing consumer habits”.
The bank started Asos and Next with a ‘buy’ rating and target prices of 5,400.0p and 9,200.0p, respectively, stating it prefers online versus offline, marketplace versus mono-brand retail and believe platform monetisation is key for profit growth,” the bank said.
“We have created a structural framework supported by proprietary data from our DBdig team including analysing warehouse activity, social media analysis and consumer surveys.
“For shorter-term trends we predict quarterly sales based on warehouse activity as well as longer-term predictions for the global retailers based on sales-weighted GDP forecasts.”
