Frasers Group Plc (LSE:FRAS) came under pressure after RBC Capital Markets cut its rating on the stock to “sector perform” from “outperform,” cautioning that the retailer’s strong share price rally has left “less to play for on valuation.” Shares slipped 1.5% in early trading at 08:22 GMT.
Despite the downgrade, RBC lifted its price target to 800p from 775p, reflecting an updated valuation outlook. Frasers shares last closed at 729p, up about 24% since the start of the year.
In a research note dated Monday, RBC analysts led by Richard Chamberlain said Frasers remains “one of the more diverse and resilient retailers in the sector,” but warned that “its valuation is likely to continue to be constrained by a lack of liquidity.” The analysts also removed the firm’s “Speculative Risk” designation, citing Frasers’ “diversity and robust balance sheet.”
RBC credited the company — which owns Sports Direct, Flannels, and House of Fraser — for maintaining a strong competitive position but noted that “its relative complexity and lack of liquidity may continue to weigh on its valuation.” The analysts added, “Following a strong run in the share price, we think there is now less valuation upside compared to some other retailers in the sector, e.g., Dunelm.”
The brokerage forecasts adjusted profit before tax of £573 million for FY26, up 2% year on year, and adjusted earnings per share of 99.5p, compared with 98.1p in FY25. Revenue is projected to rise 10% to £5.42 billion in FY26 and £5.60 billion in FY27. Frasers has guided for “a relatively stable outcome for PBT for FY26 as it is battling to offset £50mn of UK cost headwinds.”
RBC’s new 800p price target is derived from a discounted cash flow valuation of £7.60 per share and a sum-of-the-parts analysis of £8.40 per share, using a 9% weighted average cost of capital and a 1% terminal growth rate. The analysts’ downside scenario assumes a share price of 450p, while an upside case of 1,050p would require stronger revenue and margin performance.
While the firm acknowledged Frasers’ solid fundamentals, it said valuation upside has narrowed as the shares now trade around 7.5x CY26e EV/EBIT, toward the lower end of their historical range. “We mark to market our SOTP and roll forward our DCF, including stakes in other retailers, and come to an implied share price of c.800p,” RBC said.
Frasers continues to invest in its five core own brands — Everlast, Jack Wills, USA Pro, Slazenger, and Karrimor — which together generate more than half of its own-brand sales. The group is also expanding its Flannels luxury arm and introducing AI-driven retail and media tools to improve operational efficiency and profitability.
RBC concluded that Frasers’ diversified portfolio and strong balance sheet offer resilience, but recent share price gains have largely priced in the near-term potential. “There is now less valuation upside,” the analysts wrote, signaling a pause in momentum after a year of strong performance.
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