RBC Capital Markets has upgraded Currys PLC (LSE:CURY) to 'outperform' from sector perform and lifted its price target to 180p from 165p, sending the shares 2% higher to 153.6p on Tuesday.
The broker said the electricals retailer was shifting from a recovery story into what it called a likely multi-year compounder with strong cash returns.
RBC raised its earnings forecasts and medium-term margin assumptions, and now sits 6% to 8% above market consensus.
It expects Currys to reach a 3% group operating margin by 2028, five years earlier than its previous estimate of 2033.
In the UK and Ireland, RBC pointed to continued market share gains, strong mobile sales and growth in higher-margin services.
Credit adoption has risen to 25% of sales, while iD Mobile, the group's own mobile network, grew subscribers 18% to 2.6 million.
RBC values that mobile arm at about £260 million, or roughly 16% of Currys' enterprise value, an asset it sees as underappreciated.
In the Nordics, where Currys is the number one player in every market, RBC sees further scope for margin improvement.
The broker also flagged a likely lift to television sales from the football World Cup, with Sweden and Norway both competing.
RBC raised its earnings forecasts partly by factoring in a £50 million share buyback in each of the next two years.
A stronger balance sheet, with net cash above £170 million and falling pension contributions, should support sustained cash returns, the broker added.
Currys is due to report full-year results on 2 July, having guided to group adjusted pre-tax profit of around £191 million.
RBC noted the company had described recent trading as very solid, with no impact yet from the Middle East conflict.
The broker also pointed to a leadership change, with Nordics head Fredrik Tonnesen set to become chief executive as Alex Baldock leaves to run Boots.
