Home Retail Group, owner of Argos and Homebase, met full-year profit expectations but brokers were divided on its merits.
ING stuck to its sell stance as a result of factors such as the fragile consumer backdrop and sterling’s weakness, but was especially concerned about the margin outlook.
ING analyst Peter Brockwell said: “The company appears to be officially abandoning a gross margin target for both Homebase and Argos, and will focus instead on absolute cash gross margins. This illustrates the lack of medium-term earnings clarity within the business.”
Charles Stanley analyst Sam Hart maintained a reduce recommendation and said: “The rally has gone too far and the shares look expensive relative to the general retail sector.”
Citi, advising hold, said: “Our rating reflects our view that UK like-for-like trends will recover modestly during 2010.”