Broker snap: Mothercare 'oversold'

24th May 2010 13:09

Kiddies toys and equipment retailer Mothercare has plunged to a 10-month low after falling 12% in just over a week, due in part to disappointing final results.FinnCap believes the shares are now back to a level at which they appear oversold from a technical perspective and where it feels the fundamental attractions are undervalued.A full-year profit of £37.2m was less than the £39m analyst David Stoddart had wanted, while a harder than expected hit to fourth quarter UK gross margin was blamed on bad weather.But net cash of £38.5m after generating a net cash inflow of about £14m will comfortably able to finance its growth strategy.Stoddart starts coverage of the Early Learning Centre owner with a 'buy' recommendation and 600p target price.