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On Wednesday, Deutsche Bank (ETR:DBKGn) analysts made a notable change to their stance on SIG Plc. (SHI:LN), upgrading the stock from ’Sell’ to ’Hold’. Alongside this rating change, they also adjusted the price target slightly downward to GBP 0.13 from the previous GBP 0.14. The adjustment comes after SIG Plc. reported its 2024 earnings before interest and taxes (EBIT), which aligned with the guidance provided in January as well as Deutsche Bank’s own forecasts.
SIG Plc. has indicated that they anticipate market conditions to remain challenging throughout 2025, with the possibility of a recovery being more likely in the second half of the year. As the year commenced, the company’s like-for-like sales (LFLs) remained flat year-over-year, which was in line with expectations. Despite these projections, Deutsche Bank has decided to maintain its EBIT forecasts for 2025 and 2026.
The analysts at Deutsche Bank have highlighted that SIG continues to operate with a relatively high level of debt compared to others in the industry. They have also projected that the company will incur a post-tax loss and generate negative free cash flow (FCF) over the coming years. The decision to downgrade the price target to 13p was influenced by an anticipated increase in the normalized tax rate.
However, the current share price of SIG Plc., which has significantly declined since Deutsche Bank initially recommended a ’Sell’ rating, is now hovering around the new target price of 13p. This alignment of the share price with the target has prompted the analysts to revise their rating to ’Hold’.
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