Source: Sharecast
The bank, which cut the price target to 80p from 110p, acknowledged the "deep value" offered by the shares and the fact that management has a credible strategy in place to deliver a return to growth and unlock the company’s global opportunity.
However, it said it will likely take time for investors to regain confidence. This will require a return to sustained positive earnings momentum, driven by consistent store like-for-like sales growth; a contribution step-up from international and partnerships; and faster organic online growth.
More broadly, Berenberg said it was taking a more cautious view on UK mid-cap retail into the second half amid a deteriorating backdrop.
"Since the start of the recent Middle East conflict, UK macroeconomic indicators have worsened," it said. "GDP forecasts have fallen, inflation risks have heightened, and the market is now pricing in two 25bp interest rate rises to 4.25% over the remainder of 2026 - 100bp higher than was anticipated in early February."
It added that retail sector data has also turned more negative.
"Footfall declines have worsened, retail sales growth has been subdued, and overall household discretionary disposable income has slowed to no growth," Berenberg said. "In their outlook statements, company management teams are increasingly noting the potential impact of the conflict and caveating guidance with reference to the uncertain backdrop."
Against this backdrop, the bank highlighted six top picks: Genus, Beauty Tech Group, Next, JD Sports, Greencore and Hostelworld, all of which are rated ‘buy’.
At 1100 BST, Card Factory shares were down 2.3% at 67.10p.