On Friday, Berenberg reiterated its Buy rating on Currys Plc (CURY:LN) with a continuous price target of GBP 1.25. The firm highlighted the retailer's effective turnaround strategy, which has significantly reduced its total debt by over GBP 700 million from fiscal year 2019 to 2024. As of the end of April 2024, Currys reported a year-end net cash position of GBP 96 million.
The analyst from Berenberg pointed out Currys' disciplined financial approach, combined with a clear strategy and a well-adjusted cost base, which is expected to sustain normal capital expenditure levels and promote growth. Additionally, the projection indicates the company's pension deficit will be resolved by the fiscal year 2027, ceasing additional contributions and potentially increasing free cash flow to equity to approximately GBP 100 million in fiscal year 2027 and over GBP 150 million per annum thereafter.
The strong financial standing has also enabled Currys to consider returning surplus cash to shareholders during the current financial year. This move is seen as a positive step towards attracting income investors, with the potential for a 4% dividend yield being particularly appealing.
Berenberg's outlook for Currys is optimistic, with the anticipation that the company's growing net cash position will support the planned shareholder returns. The firm's analysis suggests that the combination of financial discipline, strategic clarity, and cost management has positioned Currys well for future growth and shareholder value creation.
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