Panmure Liberum, the broker, has raised its target price for Halfords Group PLC (LSE:HFD) to 300 pence from 260 pence, maintaining its 'buy' rating on the car parts and cycling retailer.
The upgrade follows Halfords' announcement that it now expects underlying pre-tax profit of between £55 million and £65 million for the financial year to March 2027, ahead of current market consensus of £52.6 million.
Panmure Liberum said the upgrade was not solely driven by unusually warm summer weather, despite management estimating the weather-related benefit at several million pounds.
The broker pointed instead to underlying improvements in like-for-like sales and margins exiting the previous financial year as a more durable driver of growth.
Panmure Liberum raised its own forecasts for the year just ended by 11%, and increased estimates for subsequent years by around 4%.
The broker said it would not be surprised to see further upgrades from Halfords before the end of the year, describing current guidance as retaining "some prudence."
Panmure Liberum expects continued momentum to be supported by garage conversions under Halfords' Fusion format, the return of the cycling replacement cycle, and other factors.
The broker also noted signs of stabilisation in tyre sales and moderating cost growth, adding that all areas of Halfords' profit and loss account were now "moving in the same direction."
