Shares in fashion retailer SuperGroup raced ahead of Thursday morning after the release of its third-quarter trading statement, helped by Panmure Gordon calling it an good entry point for potential investors.

Third-quarter sales came in at £115.1m, below Panmure's £119.2m forecast, but this was partly down to slower-than-expected store space expansion and currency effects, the broker explained. However, like-for-like (LFL) sales grew by 10.6%, well ahead of the Panmure's +4.0% estimate.

SuperGroup, famous for the 'SuperDry' brand, also moved up its margin guidance for the full year from "broadly flat" to an increase of 50-75 basis points.

As a result, Panmure reckons that the consensus profit before tax (PBT) estimate (currently £49.3m) may rise by 2-3%. The broker is already above consensus, predicting a full-year PBT of £51.3m.

"This result may tempt new shareholders, previously unsure of the Superdry brand's health, out of the woodwork," the broker said.

Pamure said that SuperGroup is trading at 12.4 times full-year earnings, dropping to 10.9 times on 2014 estimates, compared with the wider sector-average multiple of 15.2 and 13.6, respectively.

Meanwhile, the broker said that the stock's PEG - measured as price/earnings per share (EPS)/growth in EPS, which takes into account future growth - is just 0.6 which is attractive versus peers (ranging from 1.2x to 4.7x).

"We view this as an extremely attractive entry point and we are raising our target PEG to 0.80x from 0.75x and therefore our price target to 788p (750p) to reflect today's evidence of reinvigorated brand strength."

Shares were up 8.96% at 690.25p by 10:11 on Thursday.

BC

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