Broker snap: Changes needed at DSG, JPM says
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.
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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.
