B&M European Value Retail SA (LSE:BME) shares top the FTSE 100 risers today after Deutsche Bank increased its share price target and said the firm could benefit from the collapse of Wilko.
Wilko collapsed into insolvency last week and Deutsche analyst Adam Cochrane thinks this could be an opportunity for B&M to pick up market share, in addition to an acceleration in the pace of new store openings in the UK and France.
Raising his price target, Cochrane noted discount retailers have been a winning retail category over the last decade and B&M has seen a step change in sales and profitability during Covid.
Margins have been raised despite FX headwinds and inflationary pressures, he added.
"In our view, investors will focus on a company delivering a much higher ROCE, actively deploying capital into new store growth and returning cash to shareholders," Cochrane said.
He raised his share price target to 680p from 610p offering "c.25% upside potential in addition to an expected c.6-7% dividend yield".
Cochrane reiterated a 'buy' rating and shares rose 3.1% to 554.20p.