There was a bearish view of Home Retail Group ahead of its second-quarter update, due on September 10.
Pali analyst Nick Bubb rated the stock a sell and said that Argos, owing to its operation of a fixed-price catalogue, remains exposed to the VAT rises that are due next year and which are likely to “prove hard to pass on to the consumer”.
He said that relatively benign weather this summer had benefited Homebase, but there was a danger this might not be repeated next year.
ING analyst Peter Brockwell also has a sell stance on Home Retail. His principal concern is overvaluation of the stock, which he believes is trading at an unjustified premium.
Seymour Pierce analyst Freddie George also expressed concern about the stock’s valuation and said Argos “will find it difficult to recover lost ground when the markets eventually recover”.