Liberum has taken an axe to its target price for Halfords Group PLC (LSE:HFD) after the retailer issued a profit warning yesterday.
Fair value for the retailer is now160p a share reckons the broker or 61% down from its previous target of 410p.
Liberum also switched its guidance on Halfords' shares from Buy to Hold, stating that the main concern was the more than 50% increase in inventory year over year, which analysts said, “needs more questioning, especially given the tougher outlook.”
The broker is advising investors to wait “until confidence returns” before reinvesting in the company, based on a decline in its earnings momentum.
“At this stage given the uncertain outlook, we see limited near-term catalysts, and move to HOLD,” the bank said.
Halfords said pre-tax profit this year would be in the region of £65mln to £75mln, down from previous guidance of £80mln to £90mln, on an “uncertain” outlook.
Chief financial officer Loraine Woodhouse stepped down from the board yesterday, to be replaced by Jo Hartley.
Halfords’ pre-tax profit fell 9.7% year over year to £89.8mln, according to its preliminary results for 2022, despite an uplift in revenue.
The bike retailer and motor service provider announced it had generated £1.37bn of revenue for the fiscal year, 6% higher than last year.
Halfords’ shares nosedived 20% after the announcement but rallied 2.8% today to 146.8p.