Liberum Capital has upgraded its rating for Halfords Group PLC (LON:HFD) to ‘hold’ from ‘sell’ in the wake of the bikes to car parts retailer’s latest trading update today.
The broker cited valuation grounds for its change of stance, given recent share price falls by Halfords - with the stock down 7% in the past three months – as it maintained its target price at 340p.
READ: Halfords gains as cycling and motoring retail sales see boost from "staycation summer"
In morning trading, Halfords shares were changing hands at 323.1p each, up 2.4%, or 7.7p on last night’s closing price.
In a note to clients, Liberum’s analysts said that today's 20 week trading update from Halfords “shows good momentum” with Cycling and Travel Solutions performing strongly benefiting from the UK staycation theme.
They noted that “growing service related revenue remains a core part of the strategy and strong growth here is a positive”, while Halford’s Autocentres business remains “in turnaround mode”.
The analysts pointed out that management's guidance on currency headwinds is unchanged, reiterating its commentary that it is confident of fully mitigating these costs over time.
They added: “Achieving this could give material upside to consensus forecasts.”
And concluded: “We do not expect any material change today, but the update should be well received.”