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Halfords upgraded by Deutsche, as foreign exchange headwinds ease

The firm reported higher group revenue in its first half to September 29, but noted a £15mln dent due to the weaker pound
Halfords upgraded by Deutsche, as foreign exchange headwinds ease
Foreign exchange headwinds are easing, says Deutsche analyst Charlie Muir- Sands

Heavyweight broker Deutsche says we're at the bottom of the currency down 'cycle' and upgrades bikes and parts company Halfords Group PLC (LON:HFD) to 'hold' from 'sell' previously.

Yesterday, the firm reported higher group revenue in its first half to September 29 but noted a £15mln dent due to the weaker pound, which increased its costs.

READ: Halfords revenues rise, offsetting impact of weaker pound

Foreign exchange headwinds are easing, says analyst Charlie Muir- Sands, and Halfords managment are confident it will meet full year consensus expectations.

"With mitigation of sourcing cost headwinds progressing, and the headwinds themselves easing, we increase our earnings forecasts 1-6%," he said.

Muir-Sands says that with recent weakness in shares, and trading for calendar 2018 at just 11 times' price-earnings, and with a 5.8% dividend yield, the broker now sees more limited downside, hence the upgrade.

On Thursday, Halfords said its retail business generated some £511mln while autocentres brought in £77.7mln, taking group revenue to £588.7mln, up from £567mln in the comparative period of 2016.

It also increased its interim dividend by 3% to 6p per share compared to 5.83p in the same period last year.

READ: Halfords names boss of Dixons Carphone's software business as its new CEO from January next year

Deutsche's price target is 295p for the shares, against a current price of 319.80p - up 2.90% on the day.

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