Investing.com — Shares of rose over 2% on Tuesday after RBC Capital Markets upgraded the British electricals retailer to “outperform” from “sector perform” rating and raised its 12-month price target to 180p from 165p, citing stronger earnings momentum and a sharper balance sheet.
The upgrade comes as RBC analysts raised their FY27 earnings per share forecast by 5%, driven by expectations of lower operating costs as headwinds subside. RBC is now 6% to 8% above consensus on EPS for FY27-28.
RBC projects adjusted diluted EPS of 13.44p for FY26, rising to 14.75p in FY27 and 16.40p in FY28. Revenue is forecast at £9.34 billion in FY26, growing to £9.75 billion in FY27 and £10.01 billion in FY28.
Adjusted profit before tax is seen at £190.9 million in FY26, £204.5 million in FY27 and £222.2 million in FY28, per RBC Capital Markets estimates.
“Currys is transitioning from being a recovery play to a likely multiyear compounder with strong cash returns,” RBC said.
Currys gained 50 basis points of UK market share in the first 36 weeks of FY26, according to RBC, which attributes the gain partly to growth in mobile, computing and appliances, alongside higher credit adoption, up 200 basis points to 25%, and expansion in B2B.
The company’s mobile virtual network, iD Mobile, added subscribers at an 18% year-on-year rate in FY26 to reach 2.6 million.
Applying a conservative £100 per subscriber price, RBC estimates iD Mobile carries an implied valuation of approximately £260 million, equivalent to 16% of Currys’ current enterprise value, which would reduce the CY26 EV/EBIT multiple from 5.5x to 4.5x.
In the Nordics, Currys holds the number one position in each market under its Elkjop and El Giganten banners. RBC increased its Nordic EBIT forecast for FY27 by 4%, noting Currys’ dominant 37% share in Norway and 25% in Sweden, where rate cuts and a temporary reduction in food VAT have supported consumer spending. RBC noted Currys holds over 50% share in TVs and AI laptops through its Giganten banner.
Currys expects to end FY26 with net cash above £170 million, against net debt exceeding £800 million at FY20 year-end. RBC models a £50 million share buyback for both FY27 and FY28, alongside a dividend per share rising from 2.25p in FY26 to 2.75p in FY28.
RBC’s 180p price target is derived from an average of a discounted cash flow analysis, implying 177p per share using a 10% WACC and 0% terminal growth rate, and a sum-of-the-parts base case of approximately 187p.
The stock trades at 10.5x CY26 price-to-earnings. RBC sets a downside scenario of 115p and an upside scenario of 225p.