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.
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.