Citi has reiterated its bullish stance on B&M European Value Retail SA (LSE:BME), arguing the recent slide in the discount retailer’s share price is overdone and fails to reflect the company’s earnings potential.
Despite a 7% cut to earnings forecasts so far this year and a cautious mood among investors, Citi said B&M remains a dominant player in UK variety discount retail, with 35% of market revenue and over half of the profit share.
The bank pointed to the group’s strong fundamentals, including higher sales per square foot and faster store payback periods post-pandemic, as reasons to stay optimistic.
It also suggested B&M’s general merchandise offering could help protect margins if supermarket price wars flare up.
Citi said while investor sentiment is 'understandably weak', the de-rating is 'not commensurate' with the earnings growth potential, as it lowered its target price to 456p, implying a price-to-earnings multiple of 13 times for 2026.
The shares were up 1.6p at 262.7p.