Broker tips: DSG International, C&C Group, HMV
JP Morgan has trimmed its price target on DSG International to 70p from 75p and proposed a strategy to help the electrical goods retailer's share price to recover from its current 13-year low.
The lower price targets reflect 'the macro and industry-specific pressures which are unlikely to lessen' following the Currys and PC World owner's profit warning last month, JPM said.
In a note with the title 'CEO for a day - Arrested Development' the broker said that DSG could cope with building competition by taking 'a more joined-up approach to UK consumer electrics retailing offering the full suite of Brown/White/Grey/Mobile products, not through separate formats.'
It also recommended the sale or closure of PC City in Italy and its eastern European chain Electroworld.
New chief executive John Browett announces his strategy for DSG's recovery on May 15, JPM noted.
"There are some quick wins that Browett could adopt, but we believe the market is unlikely to discount further upside given the execution risk," it said.
JPM keeps its 'neutral' tag on DSG.
JP Morgan lifted its price target on C&C Group to €5.10 from €4.80, following the Magners cider maker's recent full-year results.
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The broker, which keeps its neutral rating on C&C, said the results were 'were slightly better than we had expected'.
The group should also benefit from limited marketing spending in new European markets and a reduction in fixed costs for every litre of cider produced, JP said.
However, it noted that the company is still very weather dependent and vulnerable both to competition and a worsening of the market in its home market Ireland.
It keeps its 'neutral' rating on the stock.
Investec Securities has raised its recommendation on HMV to 'hold' from 'sell', noting the music and DVD retailer's increased video game sales.
This trend could help to offset a structural decline in music sales, with DVD sales also helping to a lesser extent, the broker said.
HMV last week reported a 10.1% rise in like-for-like sales in the 16 weeks ended 26 April and said it expects full-year profits before tax and exceptional costs to be towards the upper end of market expectations.
