B&M European Value Retail SA's (LSE:BME) shares took another hit last week, falling 15% after its latest full-year update disappointed already wary investors.
The drop comes despite the company having issued a trading update just weeks earlier, prompting some to question whether the value retailer can regain its momentum without a convincing rebound in sales at existing stores.
Still, Deutsche Bank believes there is upside for patient investors. While it has trimmed its price target from 435p to 410p, the bank has reiterated its 'buy' recommendation, arguing that the company’s fundamentals remain attractive. B&M shares are currently trading at 265p.
Analyst Adam Cochrane notes that while new store openings continue to deliver growth, questions linger over like-for-like sales, the key to overcoming operational inefficiencies across the wider estate.
Deutsche expects a return to positive like-for-like growth in the first quarter, forecasting a 3% uplift helped by strong seasonal general merchandise sales.
The downgrade in price target reflects a 4% cut in 2026 earnings forecasts. But the current valuation remains appealing, according to Deutsche, with B&M trading on around eight times 2026 estimated earnings and offering a free cash flow yield of 13 per cent.
Even so, sentiment is being clouded by concerns over incoming leadership. A change at the top raises the prospect of a strategic reset or guidance revision; something investors are wary of in the current climate.
In Deutsche’s view, the risk/reward balance still skews in favour of buyers, but it’s a waiting game. The retailer must show it can drive sustainable sales growth and operational leverage, especially as cost pressures ease and discretionary spending begins to stabilise.