Several analysts began coverage of Wickes Group PLC (LON:WIX) after the home improvements retailer was spun back out of Travis Perkins and ended Wednesday trading at 272p for a market cap of £687mln.
Deutsche Bank initiated with a 'hold' rating for one of the leading players in the UK's £25bn-and-growing home improvement market.
Operating from around 230 stores and employing around 8,000 people the DB analysts started coverage with a 280p price target but said "our 'shoot the lights out' (and replace them, of course) upside scenario points to 442p".
Over at broker Peel Hunt, analysts said they believe the business "is set to enter a multi-year growth phase, benefiting from a recovering RMI (repair, maintenance and improvements) market in the UK, boosted by a rejuvenated housing market, as well as secular trends in the ‘do it for me’ market".
PH assumes a three-year revenue compound annual growth rate (CAGR) of 5.5%, slightly above the historic trend, and expect margins to trend towards 7.5% by the 2023 financial year, driving a three-year earnings per share CAGR of 16% and earnings of around 25p by that time.
The broker initiated with a 'buy' rating and 310p target price.
Analysts at Liberum also was a buyer, with a target price of 360p, noting that Wickes’ has "transformed into a digitally-led, integrated product and services business, consistently outperforming its markets".
"It is uniquely positioned and well-balanced, and management now has the freedom to invest behind its multiple growth levers."
Liberum said its "prudent" assumptions, forecast 7.5% pre-tax profit CAGR, with potential upside driven by improving RMI momentum and self-help.
"Alongside a growing material net cash position and solid dividend, the market should begin to appreciate Wickes’ high quality," Liberum said.