Peel Hunt put the boot into Sports Direct International PLC (LON:SPD) shares on Thursday, downgrading its rating for Mike Ashley’s expanding retail empire to ‘hold’ from ‘add’ in the wake of the group’s interim results.
The City broker maintained its 260p price target for the FTSE 250-listed stock, but in mid-afternoon trading, the shares were well below that level at 230.10p, down 16.7% on Wednesday’s close.
READ: Sports Direct stumbles as first-half profits plunge on House of Fraser costs
In a note to clients, Peel Hunt’s analysts said: “Today’s figures were solid given the circumstances but we have run out of patience with the lack of visibility on strategy. Yes, it’s all very interesting to hear a deep dive on Flannels, but investors required chapter and verse on the plans for House of Fraser (HOF), as opposed to an extremely optimistic pledge for it to break even next year.”
They added: “It’s the same with the core business: yes, the elevation programme is working but what about the non-elevated stores? What’s the plan for them?
“Clearly current trading is very poor, as it is everywhere, and our new forecasts reflect a tough Christmas ahead for both the core stores and HOF (our numbers now reflect the HOF losses, there’s no change to underlying EBITDA expectations).”
The analysts pointed out that Sports Direct’s shares’ valuation suggests forecast momentum here, but said they are “no longer convinced that this exists.”