Credit Suisse's new analyst remains wary of Dixons
Credit Suisse transferred coverage on consumer electronics retailer Dixons Carphone to a new analyst on Tuesday.
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Simon Irwin, Credit Suisse's new go-to man on Dixons, assumed a 'neutral' stance on the company, stating that despite the high-street firm's "kitchen-sinked" guidance, he believed that risks were still weighted to the downside.
The Credit Suisse analyst pointed out there was "rarely any rush" to buy into retail restructuring stories and that Dixons did not appear to be an exception to that rule.
"There are no further 'magic bullets' from competitor exits and a fully developed new UK strategy is presumably reliant on completion of the mobile network renegotiations, where there is no guarantee of a successful outcome," warned Irwin.
With Dixons' mobile unit remaining barely profitable, the analyst assumed that further downsizing beyond the previously announced shuttering of 92 Carphone Warehouse stores was probable.
"The strategy (for now) is primarily based on better execution and while there are always opportunities for improvement, which can be meaningful in a low margin business, it doesn't feel as through service levels in either Dixons or CPW are so bad that there are easy low hanging fruit," he said.
The analyst left forecasts for Dixons's current trading year largely unchanged, with the broker's target price unmoved at 190p, but slowed its estimates for a recovery in EPS in future years.