LONDON, November 24 (New Ratings) ““ Analyst Geoff Ruddell of Deutsche Bank upgrades Dixons (DXNS.L) from “hold” to “buy,” while raising his estimates for the company. The target price is set to 140p.
Shares of Dixons, an ecommerce company offering consumer goods online, are currently trading at 129p.
According to Deutsche Bank’s research note published this morning, the valuation of Dixons’ stock is extremely attractive, given the company’s fundamentals. The company’s earnings in the near future are likely to be volatile, the analyst says. However, the valuation of the company’s stock is already discounted for the uncertainty of earnings, the analyst mentions.
According to Deutsche Bank, the Competition Commission’s report on warranties is expected to be published shortly. The company would need to prove that its poor trading last Christmas was an operational rather than a structural issue, the analysts say. However, Dixons’ risk/reward ratio is fairly favourable, given the company’s fundamentals and its share price, Deutsche Bank mentions.
The EPS estimates for 2003/04 and 2004/05 are 10.9p and 11.9p, respectively. The EPS estimate for 2005/06 has been raised from 13.0p to 13.1p.
From newratings.com