Broker snap: Investec optimistic about Argos's potential at Home Retail

18th Mar 2013 16:07

Shares in Argos and Homebase owner Home Retail were performing well on Monday after Investec lifted its target price for the stock from 115p to 173p and reiterated its 'buy' rating, claiming that Argos is a leader of the industry, not a laggard.While many have taken a cautious view on the stock on the back of uncertainties at its struggling Argos chain, Investec analyst Bethany Hocking has labelled the business as "revolutionary"."'Click and collect' is emerging as the channel of choice for UK shoppers, and an Argos store, which is in essence an extended 'click and collect' hub, is therefore ahead of its time, in our view. "Almost half of Argos sales were multi-channel in FY12, and a 'check and reserve' order is intrinsically the most profitable for Argos. Stores are highly efficient, and set up to process single items, unlike the majority of retailers."She said that while the valuation for Homebase remains "full" for now, a transformation plan at Argos could drive material upside which is not yet captured in the current share price.Shares were trading up 1.29% at 157p before the close of trade on Monday.BC