Dixons benefits from Comet's demise

Shares in Dixons rose on Thursday following news that its main High Street rival, Comet, is likely to go into administration, prompting one broker to upgrade its price target for Dixons.

Shares in Dixons rose on Thursday following news that its main High Street rival, Comet, is likely to go into administration, prompting one broker to upgrade its price target for Dixons.

Comet, the UK's second-largest electrical specialist after Dixons, is estimated to have made a loss of £35m in the year to April.

According to The Guardian, industry sources said Comet faced a cash crunch after trade insurers cut credit lines to suppliers, forcing them to ask for payment for goods upfront.

Kate Calvert, Retail Analyst at Seymour Pierce, wrote in a note that although in the short term there may be some disruption as administrators discount Comet's stock to clear debts, Dixons should benefit from the removal of its rival.

"We reiterate our 'buy' recommendation on Dixons and raise our price target to 26p from 24p as we believe the probability of upgrades has increased given Comet's situation," she said.

"Dixons' position in its core markets of the UK and the Nordics continues to strengthen and the current valuation does not reflect the strong momentum in both regions driven by market consolidation and a strong innovation pipeline. The biggest value creation opportunity remains tackling the PIXmania and Southern European losses."

CM

Recommended

How to invest today? Look to the past, not the future
Investment strategy

How to invest today? Look to the past, not the future

The past few years have seen so many changes to our way of life that many people said we had entered a “new normal”. But as it turns out, the new norm…
18 Aug 2022
A new legal headache for Haleon
Stocks and shares

A new legal headache for Haleon

Haleon, GSK’s former consumer-products arm, spun off last month, has made a dismal debut on the stockmarket.
17 Aug 2022
Persimmon yields 12.7%, but can you trust it to deliver?
Share tips

Persimmon yields 12.7%, but can you trust it to deliver?

With a dividend yield of 12.7%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate a com…
17 Aug 2022
Cineworld faces a bleak future – investors should stay away
Share tips

Cineworld faces a bleak future – investors should stay away

Weighed down by crippling debts and with consumers tightening their belts, Cineworld's future does not look bright, says Rupert Hargreaves. Investors …
17 Aug 2022

Most Popular

Investors should get ready for a political revolution
UK Economy

Investors should get ready for a political revolution

Liz Truss will beat Rishi Sunak, cut taxes, and then shake up the Bank of England, says Helen Thomas
15 Aug 2022
How to protect your wealth as inflation hits new record highs
Investment strategy

How to protect your wealth as inflation hits new record highs

UK inflation has hit a new record high of 10.1%. It's going to hurt, says Dominic Frisby. Here's how you can protect your wealth.
17 Aug 2022
Don’t listen to the doom-mongers – the future is bright
Economy

Don’t listen to the doom-mongers – the future is bright

With volatile markets, raging inflation and industrial unrest, it may feel like things are bad and likely to get worse. But the end of the world is no…
15 Aug 2022