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Ted Baker rallies on Goldman upgrade
Ted Baker rallied on Tuesday as Goldman Sachs upgraded the stock to 'buy' from 'neutral', keeping its 3,250p target as it said the share price drop since the January statement was "overdone".
Since the update, the shares have dropped 14%, which GS said partly reflects weak European clothing trading patterns in March and FY19 earnings per share growth guidance towards the lower end of the group's +10-15% medium-term range.
GS said the latter relates to the closure of four underperforming stores in China and an expected decline in the gross margin in the second half of next year given the demanding comparable.
Last month, Ted Baker reported a 12% jump in full-year pre-tax profit as revenue grew, but the retailer also warned that "external" trading conditions would remain challenging.
In the year to 27 January 2018, pre-tax profit rose to £68.8m from £61.3m on revenue of £591.7m, up 11% from the previous year despite a challenging backdrop. Adjusted earnings per share rose 12% to 127.7p and the company lifted its total dividend by 12% to 60.1p a share.
The company said recent unseasonal weather across Europe and the East Coast of the US had affected the early part of its spring/summer and that it expects external trading conditions to remain challenging across many of its global markets. However, it also stressed that the new season collections have been well received.
At 1020 BST, the shares were up 5.1% to 2,832p.