Canccord Genuity hikes Halfords estimates, but keeps at 'hold'

(Sharecast News) - Canaccord Genuity has lifted its target price for auto and bike parts retailer Halfords by 12% following this week's unscheduled profit upgrades, but has kept a neutral stance on the stock, citing an uncertain outlook. The broker raised its target for the shares from 127p to 142p, but maintained a 'hold' rating.

Shares in Halfords surged on Tuesday after the company said it had traded well over the third quarter, with like-for-like growth turning positive following a 0.1% decline in the first half.

Freight and FX cost headwinds were also lower than expected, leading the retailer to raise its underlying profit before tax (PBT) guidance of £32m to £37m, ahead of the current consensus forecast of £28.3m, according to Canaccord Genuity.

"The combination of improved trading and lower-than-expected costs, along with strategic progress on pricing, promotions and cost saving drives management to upgrade profit expectations," the broker said.

"Despite the positive recent trading performance, management remains cautious on the outlook for FY26 and beyond given the challenging consumer backdrop. We increase our FY25E adj. PBT forecast by 20% to £33.0m, with a more modest upgrade of 2-3% in outer years given the ongoing uncertainty."

On the broker's revised forecasts, the stock trades at 13.1 times current-year earnings, dropping to 13.0 for next year.

Shares were more or less flat at 142.4p by 1140 GMT on Wednesday, in line with Canaccord Genuity's target.