Zeus Capital retained its buy rating and 50 pence price target on Topps Tiles shares (LON: TPT) in a note on Monday following a mixed first-half trading update, arguing that the tile retailer’s shares offer an attractive entry point for investors willing to look through near-term market weakness.
The update showed group revenue excluding CTD Tiles up 2.1% year-on-year in the first half, but with growth slowing from 3.7% in the first quarter to 0.6% in the second. Zeus noted the performance remained well ahead of a subdued U.K. home improvements market, which declined 2.5% over the same period.
In response to the softer backdrop, Topps announced the closure of 23 underperforming stores, reducing its Topps Tiles estate from 297 at the start of the year to 274 by year-end, alongside head office cost savings. Zeus noted that the benefit of these measures is expected to be weighted toward the second half of 2026.
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The broker trimmed its forecasts, cutting revenue by 4.8% and reducing adjusted pre-tax profit by 22.1% for fiscal 2026, though still projecting marginal improvement versus fiscal 2025.
“While downgrades are clearly disappointing, we take some consolation in continued market share growth against a highly challenging backdrop,” Zeus said.
On valuation, Zeus stated that the shares now trade at 10x fiscal 2026 earnings, falling to 7.8x in fiscal 2027. “This represents an attractive entry point into a leveraged play on volume recovery as markets improve,” the firm argued.
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