Frasers Group PLC (LSE:FRAS) climbed on Monday after being granted an upgrade by RBC analysts on the “underappreciated” diverse nature of the business.
Highlighting a “compelling” valuation, RBC bumped the Sports Direct owner up from a ‘sector perform’ to an ‘outperform’ rating.
This was based on the “likely resilience” of Frasers’ sports retail wing, property value and strategic stakes, such as in Hugo Boss, RBC said.
“Frasers contains a lot of moving parts but we think its resilience, cash generation and strategic stake investments have been underappreciated by the market.”
Strategic investments collectively equate to over £900 million, RBC highlighted, through which Frasers has developed strong brand partnerships.
Warehouse automation had also allowed Sports Direct to cut handling costs and reduce stock, analysts said, while focus on the likes of property and Frasers’ financial services offered further opportunities.
“Frasers is now more diverse, meaning that it should offer protection from pressures on any one area of consumer spending,” RBC added.
A share price target of 1,050p was set, marking a prospective 36% rise on Friday’s close.
Shares climbed by 2.3% to 784.5p on Monday.