Broker snap: Seymour Pierce celebrates new CEO at Halfords

4th Oct 2012 09:46

Seymour Pierce has raised its target price for car and bike parts retailer Halfords from 300p to 340p and reiterated its 'buy' rating following the appointment of a new Chief Executive Officer (CEO) and better-than-expected trading in the second quarter."The big news is the excellent appointment of Matt Davies who starts today as CEO," said analyst Kate Calvert."He was CEO of Pets At Home for eight years until April 2012. Pets has a reputation for service, the improvement of which we believe is a priority at Halfords, and Mr Davies oversaw the growth of the business from 140 to over 300 stores," she said.Meanwhile, after a "disastrous" weather-affected first quarter, Halfords has seen a much improved performance in the following period, the broker said. The company is now guiding to full-year pre-tax profits at the top end of guidance."We believe the shares should react positively to the news that Mr Davies starts today and the fact that FY guidance has been narrowed to the top end, despite the shares having rallied by 34% since its Q1 results when we upgraded our recommendation to 'buy'," Calvert said.Seymour Pierce said that the valuation remains undemanding - shares are trading at 9.3 times full-year earnings on new numbers - given the "profit recovery potential of the business".By 09:45, shares were up 13.19% at 301.08p.BC