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On Friday, Citi analysts reiterated their Buy rating on B&M European Value Retail SA (LON:BMEB) (BME:LN) (OTC: BMRRY) shares, with a steady price target of GBP 4.56. Citi’s assessment points to B&M’s significant market share in the UK Variety Discount Retail sector, where it commands 35% in revenue and over 50% in profits. The firm has observed a recent easing in competitive pressures within the market.
B&M’s stock has experienced a devaluation, which Citi analysts believe does not align with the company’s earnings growth potential. Despite a -7% revision in earnings year-to-date, the analysts argue that the market’s response might be excessive. They highlight B&M’s robust sales densities and faster store paybacks following the pandemic as key indicators of its structural advantages.
Citi’s commentary also touches on the potential impact of supermarket price wars, suggesting that B&M’s General Merchandise offerings could provide a cushion for margins. This, in turn, could help stabilize earnings and potentially lead to a revaluation of the stock in the future.
The price target set by Citi, at 456 pence, is based on a forecasted 13 times the fiscal year 2026 earnings per share. This target reflects the firm’s confidence in B&M’s ability to maintain its strong position in the market and to capitalize on its growth opportunities in the coming years.
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