Liberum upped its price target on shares of B&M European Value Retail to 650p from 600p on Friday following the company’s trading update a day earlier.
The broker said the update and raised guidance “yet again shows the strength of B&M’s discount, general merchandise offer and predominantly retail park sites, which have left it primed to benefit during the lockdowns, as well as being a long-term structural winner”.
Liberum said the retailer’s value offer is driving new customer acquisition, while maintaining margin strength and delivering broad category growth.
“Free cash flow generation has accelerated and net debt: EBITDA should come in around circa 1x at year-end, even following the £450m of recent special dividend pay-outs,” it said.
Liberum reiterated its ‘buy’ recommendation on the stock and said it does not see the current valuation as stretching for the momentum being delivered.
