Currys shares ‘too cheap’ and JD Sports tipped to recover
Despite a muted response to annual results, City analysts believe the electricals retailer is undervalued. They’re hot on upside potential at JD too. Graeme Evans explains why.
2nd July 2026 14:00
by Graeme Evans from interactive investor
Photo: Mike Kemp/In Pictures via Getty Images.
A dividend boost for Currys (LSE:CURY) shareholders alongside forecasts of further upside for the shares marked a strong results-day farewell for Boots-bound chief executive Alex Baldock.
He said the retailer was “trending in the right direction on every dimension that matters”, having announced a 18% rise in adjusted profits to £191 million in the year to 2 May.
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Baldock steps down next month with shares three times the 47p seen in early 2024, when the Nordics arm was struggling against intense levels of competition and the chain became an unsuccessful target for Elliott Advisors with a takeover pitched at 62p a share.
Having returned to the dividend ranks last autumn, Currys today announced a doubling of the 2025-26 award to a better-than-expected 3p a share. This represents cover of 4.5 times earnings and includes plans to distribute 2.25p a share on 25 September.
The board expects to bring this cover down to around four times in the year ahead, with scope to go further over time.
This and the launch of another £50 million share buyback follows a much-improved cash generation performance, with year-end cash of £176 million representing a reduction in total indebtedness of over £900 million since 2019.
City bank Berenberg today lifted its dividend forecasts by 30% as it said significantly lower pension contributions and exceptional costs should lead to a material step-up in free cash flow.
It points out that this transformed balance sheet has allowed management to focus on new and diversified growth areas.
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This was highlighted in today’s results, including 7% growth in higher-margin recurring services revenue in the UK and Ireland to £648 million. Business-to-business revenue growth lifted 20% and subscriptions to the mobile virtual network iD Mobile by 18% at 2.6 million.
Berenberg said: “This sets a very positive outlook that can extend the earnings upgrade cycle for some time to come.”
The FTSE-250-listed shares, which today drifted to 156p, trade on a multiple of about 12 times forecast earnings.
Berenberg, which has a price target of 210p, said this looked too cheap given the “ongoing momentum and growth opportunity ahead”.
Peel Hunt has maintained its 182p target but upgraded its adjusted profit estimate for this year by 3% to £205 million, with similar changes to subsequent years.
It added: “While the strength of the balance sheet provides optionality, we see scope for another £50 million buyback on top of the one announced today, assuming peak trading is successful.”
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The City firm said unchanged guidance and solid current trading represented a clean handover for Baldock, who is joining Boots after eight years at the helm of Currys.
The group last month appointed Fredrik Tønnesen as new boss, having impressed with the turnaround of the Nordics business that accounts for about 40% of total revenues.
Baldock said: “In Fredrik, the business has an outstanding leader to continue and accelerate this progress. I’ll be a loyal Currys customer, advocate and shareholder all my life, and will be cheering on Fredrik and his world-class team.”
Recovery potential
The strong run for Currys shares has been in contrast to the performance of JD Sports Fashion (LSE:JD.), which has fallen 7% over the past year to 83.3p. This includes an upturn since 65.3p in early May and leaves JD on a lowly valuation multiple of seven times forecast earnings.
Berenberg this week reiterated a Buy stance with a price target of 155p after noting the chain’s medium-term recovery potential on the back of self-help measures.
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These include a more diversified product range, store optimisation and investment in the online channel. It added that the company is highly cash-generative, with a rolling £200 million share buyback the equivalent to 5% of market capitalisation.
The bank said JD’s recent issues were to a large extent externally driven, reflecting a slowdown in the sportswear market, pressure on disposable income among JD’s young customers and a loss of brand heat at Nike Inc Class B (NYSE:NKE).
It added: “These issues were compounded by M&A distractions and slow investment in tech and online. The industry’s structure has not changed: sporting goods brands typically rely on wholesale distribution for over 60% of their revenue and JD is the leading global distributor.”
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