Oriel downgrades Ted Baker despite strong sales growth

10th Jun 2014 10:41

Oriel Securities has downgraded Ted Baker shares from 'buy' to 'add' despite a strong start to the year from the fashion retailer, saying that upside is limited given the stock's current valuation.The company said that group revenues jumped 17.9% in the first 19 weeks of its financial year, helped by a strong performance across established markets and "progress" in its newer markets.Oriel said this implies that like-for-like (LFL) growth was maintained at last year's exit rate of around 6% which "will be better than most retailers in the space"."The shares have rebounded well from their lows. We are big fans of the company: it has a coherent strategy that is clearly working," Oriel said."However, expecting material upgrades or a major re-rating from 22x [earnings] is probably overly optimistic: we expect the shares to continue to perform but are more comfortable with an 'add' than a 'buy'."The broker kept a 2,200p target price for the shares.The shares were 1.4% lower at 1,990p.BC