Source: Sharecast
In their judgement, the company's profit and loss suggested margin for just low single digit growth in operating expenditures when one took into account depreciation and amortisation expenses as well as provision releases.
Yet space growth and cost inflation were pegged to grow at rates in the mid single digits, resulting in a roughly 350 basis point gap between depreciation and amortisations on the one hand and capex on the other.
"This is evident in deteriorating cash conversion, and as it inevitably closes with time, will present a headwind to margins," they said in a research note sent to clients.
They were also anticipating flat like-for-like sales growth across the 2025 fiscal year, against company guidance for 1-4% growth.
"Whilst the shares appear cheap vs history and relative to peers on a PE basis, a peer average Cal-25 7.5% FCF yield drives our 110p TP."