Sports Direct gets a boost as Exane BNP ups target price
Sports Direct International got a boost as Exane BNP Paribas lifted its target price on the stock to 860p from 800p.
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Exane said it continues to value Sports Direct at a premium of around 5% to the sector given the quality of the UK business, strong earnings growth profile and optionality of European expansion.
The bank moves to a 12.5x EV/EBIT multiple, from 12x, given the sector re-rating and applying this multiple to its unchanged April 2017 forecasts drives the new target price.
It said the flexibility of the store estate is allowing Sports Direct to move to larger, better invested formats, supported by brand partners, while Online has accelerated from the successful introduction of Click & Collect.
Exane said changes to the incentive scheme announced last week were largely expected, and it does not see this as a concern.
“Incentive targets will continue to support 10-15% annual earnings growth before acquisitions. This remains a high quality business at an attractive price.”
At 09:38, shares were up 2% at 762p.