Stifel remains optimistic about DFS Furniture PLC (LSE:DFS), maintaining a "buy" recommendation and setting a price target of 150p — 33% above the current share price.
This bullish stance comes even as the investment bank has revised its sales and profit forecasts downward for the current financial year, with sales and profit expected to drop by 2% and 30% respectively.
According to Stifel, DFS is strategically positioned to benefit from any market recovery, anticipating a resurgence in consumer confidence in the latter half of the year.
This is expected to drive a return to approximately 6% annual sales growth for the furniture retailer, fuelled by lower inflation, an increase in mortgage approvals, and potential interest rate cuts.
However, Stifel has also highlighted significant risks, noting DFS's high level of debt and the tough market conditions.
The investment bank has outlined scenarios both bearish and bullish: the bear case warns of potential covenant breaches if the negative market persists, while the bullish case suggests substantial gains if recovery occurs sooner than expected.
In the afternoon session, the shares were trading sideways at 112.85p.