Broker tips: Halfords, ITM Power, EasyJet

(Sharecast News) - Canaccord Genuity lifted its target price on Halfords to 255p from 170p on Tuesday, saying strong early trading in FY27 and continued operational progress under new chief executive Henry Birch had prompted further upgrades to profit forecasts.

The Canadian bank said Halfords delivered a solid performance in FY26, with improved execution across retail and autocentres driving grossmargin expansion to a decade high and supporting resilient profit growth despite cost inflation.

Group revenues rose 2.9% to �1.76bn, up 4.8% on a likeforlike basis, with retail LFL sales up 4.1% and autocentres ahead 5.8%. Gross profits increased 7.3% to �932.3m, lifting margins 210bps to 52.8%. Adjusted underlying earnings rose 3.1% to �56.4m, while underlying pre-tax profits increased 4.1% to �45.4m, or �41.5m excluding an accounting change.

Canaccord said execution in the 'Optimise' phase of Halfords' 'Fit for the Future' strategy was delivering clear gains, particularly in autocentres, where EBIT margin improved to 3.1%, while retail benefited from stronger category management and improving digital capability, including higher AIdriven traffic and conversion.

Additionally, Canaccord also noted that momentum has continued into FY27, with April-June trading prompting upgraded guidance. Management now expects underlying pre-tax profits at the top end of Halfords' �45.7m to �52.3m range, leading Canaccord to raise its FY27 pre-tax profit forecast by 16% to �52m and reiterate its 'buy' rating.

Analysts at Berenberg lifted their price target on ITM Power from 110p to 200p on Tuesday, saying the group's partnership with Rheinmetall on the Giga PtX project representeed a "significant growth opportunity" as the it pushes into fresh endmarkets.

Berenberg said the Rheinmetall collaboration centres on a different use case to traditional greenhydrogen applications, with a focus on energy security for armed forces rather than decarbonisation. It stated green fuels offered a resilient alternative to diesel and kerosene in defence and other missioncritical sectors where electrification was not viable, and stated Giga PtX could become a major market for largescale hydrogen production.

ITM has been opening new markets and diversifying its potential bidding pipeline, with Berenberg highlighting Rheinmetall's estimate that the project could ultimately involve up to 1,500 plants. Using a conservative average of 25MW per site, the broker said this implies around 37.5GW of electrolysers - a "significant opportunity" for ITM to expand its future pipeline and for Giga PtX to anchor the next phase of its growth.

Berenberg added that ITM's PEM electrolysis technology could form the blueprint for pilot plants that, over the next five years, build towards "several hundred decentralised plants" of up to 50MW each. ITM's product line, including the ALPHA 50, the world's first fullscope 50MW plant, was described as well suited to this demand and offering a long runway for future orders.

"Given the significant long-term growth drivers and opportunities, we adjust our long-term forecasts while leaving our near-term estimates broadly unchanged. We roll forward our valuation with our price target increasing to 200p and we reiterate our 'buy' recommendation," said Berenberg.

EasyJet was downgraded on Tuesday by both Citi and RBC Capital Markets, after the budget airline rejected a fourth, �4.9bn approach from US suitor Castlelake last week but agreed to enter discussions.

Citi downgraded easyJet to 'neutral' from 'buy' but lifted its price target to 580p from 500p as it noted that the easing of war concerns and interest from Castlelake have seen the shares rise 75% since their mid-May lows.

"Completion of a takeover could offer another 20- 25%, though this alone is not enough to be buyers when considering the outstanding impediments to completion," the bank said. "At the same time, we see no further upside from the carrier's own turnaround plan after the recent rally, while current trading continues to sound challenging for summer."

RBC Capital Markets, which said the risk-reward appears balanced at the current share price, downgraded the stock to 'sector perform' from 'outperform' but hiked its price target to 600p from 405p.

It said the shares have increased by roughly 44% since the Castlelake-led approach became public, outperforming most peers by more than 30% in this period. "In a takeover scenario, we think there could be further upside beyond the previous offer of 650p/share," it said. "However, we think there could be more than 20% near-term downside potential in the absence of a takeover."