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RBC Capital ups target for Dixons Carphone, reiterates positive view on strong market position

RBC’s analysts said: "Dixons Carphone has a very strong market position in both the UK and Northern Europe, and we think it should show strong momentum in consumer electronics heading into the new financial year”
Currys/PC World store
The Canadian broker upped its target for the FTSE 250-listed firm to 250p from 230p and repeated an ‘outperform’ rating on the stock

RBC Capital has raised its price target for Dixons Carphone Plc (LON:DC.) and reiterated its positive view on the electricals retailer which is under new management.

The Canadian broker upped its target for the FTSE 250-listed firm to 250p from 230p and repeated an ‘outperform’ rating on the stock.

READ: Dixons Carphone dumps loss-making honeybee software unit on US tech firm Synchronoss

Dixons Carphone’s shares were trading at 230.4p in mid-morning trading on Friday, up 1.1% on the previous session’s close.

In a note to clients, RBC’s analysts said the target hike came after they have raised their earnings per share forecasts by 2%-6% following Dixons Carphone’s sale of its loss-making honeybee software business.

They added: “Dixons Carphone has a very strong market position in both the UK and Northern Europe, and we think it should show strong momentum in consumer electronics heading into the new financial year.”

Mobile business still facing challenges

The analysts noted that Dixons Carphone’s smaller mobile business is still facing challenging industry headwinds but they expect the group to manage the cost base down and lower its working capital intensity over time.

“DC should also benefit from further cost savings in the UK (e.g., lower rents) and from new warehousing in the Nordic area,” the analysts added.

Dixons Carphone - which owns Curry's and PC World stores in the UK - will report its full-year results on June 21 and the analysts expect these to show evidence of strong recent trading in Electricals.

They concluded: “We also expect new CEO Alex Baldock to talk about the new structure and management team of the group, although it is too early for a full strategic review.”

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Dixons Carphone Plc Timeline

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