Oriel repeats 'buy' on Halfords after "stellar Q1"

10th Jul 2014 11:43

Oriel Securities has reiterated its 'buy' recommendation for Halfords despite a negative market reaction to a first-quarter statement on Thursday, saying that the update from the car- and bike-parts retailer was "stellar".The broker said that the cycling division was a standout performer, helping group sales to rise 7.9% which was ahead of the top of the range of analysts' estimates."Against a tough comp Halfords cycling performance is eye-catching: it is premium bike sales that have led the way, but it is clear that having a decent range of PACs [parts, accessories and clothing] helps too," Oriel said.Meanwhile, the broker pointed out that the car maintenance division was surprisingly strong despite unfavourable conditions, with like-for-like (LFL) sales unexpectedly showing growth.The broker said that its forecast for full-year group LFL growth of 6% "may well [be] too low" and has raised this estimate to 6.5%."The shares have had a good run and to a degree Q1's excellent is priced in. However momentum is very strong and we stay buyers."A 550p target price was kept for the stock, which was trading 2.7% ;lower at 478.7p by 11:31.BC