Card Factory (LSE:CARD) shed 8% after a trading update, a move seemingly at odds with the bullish tone of the statement.
Brokers too seemed to be struggling to find any reason for the harsh treatment. The connected Peel Hunt said sales look to be going well with like-for-likes ahead of its expectations.
Margins, too, are holding firm, it added, but perhaps based on past mishaps, the broker said it is wary of long-term market fundamentals and will wait to see results from Partnerships and Online before it feels more confident in the equity story.
Peel Hunt‘s target price is 125p.
House broker Liberum understandably was more upbeat, noting profit expectations have been consistently upgraded since November 2022 with its forecast for this year raised by 50%.
“CARD is now a true growth stock, with the plans to deliver £190m of additional revenue (FY23-27E annual revenue growth of 8.8%) and +3.5ppt of PBT margin by 2027 through on clear self-help to expand in celebration essentials, leverage stores and integrate digital throughout the offer."
International partnerships are expected to drive 45% of the additional sales, scaling rapidly towards the 2027 targets.
“The growth plan is self-funded from internally generated cash and is 100% down to management’s execution, with no reliance on further market recovery," said the house broker.
“The current share price and valuation (CY24E P/E 7.9x) gives little credit for any capture of the future opportunities.”
Liberum has a punchy target of 165p or 65% above today’s price of 100p, down 8p.