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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Regulator moves to protect access to cash amid branch closures and disappearing ATMs
News The Financial Conduct Authority has told banks to start assessing if local communities have adequate cash access from mid-September
By Marc Shoffman Published
-
VAT hike on private school fees could come earlier than previously expected
The government could start charging VAT on private school fees as soon as January 2025, according to the latest reports. What does it mean for parents?
By Katie Williams Published