Broker note - Debenhams
Credit Suisse re-iterates its Â‘UnderperformÂ’ recommendation on Debenhams in the aftermath of its fudraisingThe broker says the deal was priced favourably for the company at only a 13p di scount to the prevailing share price and that it has moved Debenhams to a better balance sheet position. Its net debt/EBITDA drops from over 3x to 1.8x by 2010 although there remains much volatility with these forecasts.
Credit Suisse is cautious on the prospects for Debenhams and points to the sale of a batch of shares by CVC on the day of the fundraising as an indication of a low level of belief in its recovery prospects. The broker keeps its target price on Debenhams of 75p, which compares with an underlying share price of 77.25p.
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