Get ready to really getting switched on to see a major marketing of Microsoft’s Copilot+PC range of services, with Currys (LON:CURY) being the exclusive UK partner.
The Microsoft product was launched in 2023 but it is now gaining big market awareness.
Designed to work with Microsoft 365 applications and Bing, Copilot is an AI-powered tool that helps users with productivity, creativity and communication tasks – it is available for Windows, Mac, Apple iOS and Android.
The Business
Currys is a leading omnichannel retailer of technology products and services, operating through online and 719 stores in 6 countries.
In the UK&I it trades as Currys; and in the Nordics under the Elkjøp brand.
In each of these markets it is the market leader, employing in total some 24,000 capable and committed group colleagues.
The £877m capitalised group’s operations are supported by a sourcing office in Hong Kong, state-of-the-art repair facilities and an extensive distribution network, enabling fast and efficient delivery to stores and homes.
Recent Finals – 27th June
For the year ended 27th April the group reported a 4% drop in group revenues to £8.48bn (£8.88bn) but improved its adjusted pre-tax profits by 10% to £118m (£107m), with earnings per share of 7.9p (7.4p).
It was quite a year – one of disposal and reorganisation.
CEO Alex Baldock stated that:
“Our performance continues to strengthen.
We’ve kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we’re stronger financially.
We can see our progress in ever-more engaged colleagues, more satisfied customers and better financial performance.
Continued growth in sales of solutions and services were particular highlights: they’re good for customers, margins and recurring revenues, and they lean on Currys’ competitive strengths.
We’re planning prudently but confidently for the year ahead, on course to grow both profits and cashflow while carefully stepping back up to more normal investment levels.
Encouraged as we are by our progress, we know we can go further.
For one thing, we expect AI-powered technology to be the most exciting new product cycle since the tablet in 2010.
With our partnerships, scale and expert colleagues to demystify AI, we’re best-placed to benefit.”
Analysts View
Wayne Brown and Anubhav Malhotra at Panmure Liberum rate the group’s shares as a Buy, with a Price Objective of 135p.
They are getting excited by the potential of Currys being the exclusive partner to Microsoft for the launch of their recent Copilot+PC range, commenting that:
“Early adoption will kick-start interest, but industry experts have 60% of all PC’s being AI enabled by 2027 – that could transform growth alone for Currys.
While we understand consumers may initially be cautious of AI, the practical applications and convenience that these devices can bring to one’s life, has the power to fundamentally transform lifestyles, habits and how we use technology/devices akin to the smartphone in 2007.”
The brokers are looking for the current year to end April 2025 to show some £8.37bn of sales, while adjusted pre-tax profits could rise to £130.2m, worth 8.7p in earnings per share.
Jumping forward to 2026 they estimate £8.54bn sales, £155.1m profits and 10.3p in earnings per share.
Better margins show through with the analyst assumptions for 2027, with £8.71bn turnover, £178.2m of profits and 11.9p in earnings per share.
Over at Deutsche Bank their analyst Adam Cochrane has recently upped his rating from Hold to Buy for the group’s shares, setting a 95p Price Objective and stating that:
“The potential for replacement cycles in electronics, four years on from the Covid surge in demand, sits outside of forecasts and company planning assumptions – Currys is now well placed to benefit from improving electricals demand.”
Some 9 analysts follow the company, the consensus average Price Objective is 96.50p.
My View
Between now and the group holding its AGM on Thursday 5th September (as well as issuing its Trading Update) I would expect this group’s shares to move a lot higher.
With well over 60% of the group’s equity being held by investment professionals, plus 6.6% held by Frasers Group, together with ex-Carphone boss David Ross holding 4.4%, this shareholders list is very strong.
It is also an undervalued situation, especially now that its Management is running a tighter ship.
It could still be wide open to a foreign predator, particularly so if the shares, now at 77.45p, continue to be so under-rated by the market.
Just look at those estimates for group earnings over the next three years – this stock is CHEAP.