Broker snap: Carpetright recovery gone far enough

26th Jun 2009 13:20

Singer Equity Research has downgraded its rating of floor coverings retailer Carpetright reckoning the share price now represents fair value."Our change of stance [from a "buy" rating] reflects the re-rating that has been achieved. The shares are up c75% since going onto the buy list and firm evidence of stabilising UK sales is now required to advance any further," Singer says. The broker has a price target of 565p for the stock."Our forecasts assume an EBIT [earnings before interest and tax] margin in the UK of just 4.5% in the year just ended, but with scope for recovery back towards 14.5% once it emerges from the down-cycle. Historical recovery has been rapid and we see no exception to that rule this time round," Singer observes.