Deutsche Bank cuts UK retail ratings as household spending outlook worsens

Investing.com — Deutsche Bank's retail analysts cut their ratings and target prices on various UK consumer stocks due to a weaker outlook for household spending.

AB Foods' rating was downgraded from “hold” to “sell” and its target price was lowered from 2220p to 2130p.

Dunelm's “buy” grade was maintained, while its target price was raised from 1320p to 1360p. Kingfisher's rating has been downgraded from “buy” to “hold” and its target price has been lowered from 320p to 280p.

Marks & Spencer maintained its “buy” grade, while its target price was cut from 450p to 435p. While Next's “hold” grade was unchanged, its target price was raised from 10800p to 11600p.

Victorian Plumbing's “hold” grade was maintained, while its target price was reduced from 95p to 70p. Wickes Group's rating was downgraded from “buy” to “sell” and its target price was reduced from 205p to 195p.

Analysts Adam Cochrane and Benjamin Yokyong-Zoega said: “Late 2024 and early 2025 likely represent the peak of consumer power.” Real wage growth is expected to slow and unemployment concerns begin to rise.

Analysts said: “We are taking a more cautious view of the UK consumer.” Deutsche Bank's Household Cash Flow model suggests discretionary spending growth will fall from 7% in the first half of the year to 3% in the first half of the year unless households use their savings.

Retail sales remained strong into the second quarter, supported by warmer weather, but performance varied by category.

While consumer confidence was low, Deutsche Bank's newly created “Fear Index” showed that conditions could worsen.

This article was created, translated and reviewed by an editor with the support of artificial intelligence. See our Terms and Conditions section for more information.

Continue Reading at Investing.com Turkey