Market reaction to the results from greetings cards seller Card Factory PLC (LON:CARD) has been positive but Liberum feels some analysts may be too bullish.
The results came in broadly as expected, with underlying earnings (Ebitda) right in the middle of the recently set range.
Liberum, which is a buyer despite cutting its price target to 210p from 240p, sees “little by the way of a positive catalyst” in this morning’s update.
As admitted by management, any underlying Ebitda growth for the current year is likely to be limited while the expectations for a special dividend are now between 5p and 10p, compared to last year’s ‘special’ of 15p.
“This should not be a surprise but could mean that some analysts’ forecasts may appear too bullish,” Liberum said.
Analysts are expecting sales mix and currency headwinds will persist this year and that Ebitda margins will fall by around 1.2 percentage points.
Liberum’s price target cut reflects the lack of profit growth and the challenging outlook but the stock remains worth buying because of low valuation, the highly cash generative nature of the business that underpins a yield (including the special dividend) of 9-10%.