Halfords shares tanked on Tuesday after Panmure Gordon downgraded the stock to ‘hold’ from ‘buy’ and slashed the price target to 150p from 300p.
“As one of the most operationally and financially geared operators in our coverage universe, Halfords (HFD) is naturally at some risk coming into the period of significantly increased pressure on consumer spending in 2022,” it said.
“We support much of the current strategy but we feel focus mainly on the AutoCentres business has left the Retail division somewhat exposed in the current environment.”
Panmure said Halfords has actual cash after its 2021/22 placing but also significant lease exposure and thereby elevated lease adjusted debt gearing.
“We are reducing our forecasts marginally ahead of the 7th September trading update and neutralising our target price (50% cut) and recommendation,” it said. “We believe that there is significant upside in HFD and that it is unlikely to go bust, however harsh the coming winter is for UK retailers. But we prefer to wait for better visibility.”
At 0915 BST, the shares were down 11% at 136.90p.
