Page 27 - DIY INVESTOR MAGAZINE - NOVEMBER 2018
P. 27

  Due to the nature of their operations, brokers naturally offer a greater proportion of ‘buy’ ratings than independent tipsters. That’s why, in the chart above, the percentage of sell ratings in the sector is considerably higher for tipsters than brokers.
However, the retail sector is typically one of the key sectors where such a distinct divergence in sentiment exists, and it’s therefore unusual to find a company where brokers and tipsters agree unanimously. Sadly for Debenhams (DEB), the firm has done a very good job of uniting both tipsters and brokers in their ‘Sell’ consensus.
A recently announced plan to close as much as fifty Debenhams stores in recent days has prompted a positive response of +12% in the firm’s shares, but let’s put this in perspective: shares are languishing over 70% below their levels at the end of 2017, and the firm expects ‘no improvement in the trading environment for the foreseeable future’.
Action was urgently required, and it has now – finally
– been taken. But for professional tipsters and brokers alike, it’s a case of too little, too late. Motley Fool contributor Roland Head believes that the business will survive, but adds that ‘it’s likely to need an injection of fresh cash at some point. This could be highly dilutive for shareholders, so I’d avoid this stock for now’.
  TIPSTERS DOWNBEAT ON DEBENHAMS
DEBENHAMS (DEB) SHARE PRICE AND TIPSTER SENTIMENT (2016 – 2018)
 Edward Sheldon (also the Motley Fool) also suggests that investors should ‘steer well clear’, and brokers such as Goldman Sachs, Peel Hunt, Deutsche Bank, Numis and Liberum Capital have awarded the company a ‘hold’ or ‘sell’ in recent weeks.
Meanwhile, with a total declared short position of 11% taken against shares in the retailer, Debenhams con- tinues to be amongst the most shorted stocks on the London Stock Exchange.
With all that being said, Roland Head sees signs of hope, with the new-format stores outperforming the more traditional outlets and online sales growth of 16% for the second half of the year.
Given the current consensus outlook, going long in De- benhams shares isn’t for the faint-hearted.
27 DIY Investor Magazine | Dec 2018























































































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