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Poundland downgraded by Deutsche

17 June 2016 14:32

Deutsche Bank has downgraded its investment rating on Poundland (LON:PLND) to hold from buy as the discount high street retailer's operating performance takes a back seat to potential acquisition by Steinhoff.

Analysts have upped their target to 205 pence a share from 180 pence.

The City heavyweight commented: "We acknowledge that synergies for Steinhoff could justify a higher valuation. However sales momentum is poor, there is no firm offer on the table, limited prospect of a competing bidder and shares are already trading at a 32% premium to their undisturbed price."

Meanwhile, Jefferies upped its rating on the stock to hold from underperform, yesterday, on news that Warburg Pincus had sold its final 41mln shares in the retailer, which caused the share price to rise 24 per cent to 196 pence on the day.

The broker said: "We believe Steinhoff will make an offer and upgrade our rating to Hold and price target to 195p [from 135p]."

At 2:32pm: (LON:PLND) Poundland Group share price was +0.13p at 205.13p

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