Sports Direct Share News (SPD)

(ShareCast News) - Sports Direct International was under the cosh on Wednesday as Cantor Fitzgerald cut its price target on the hold-rated stock to 260p from 320p after the company warned last week that full-year 2017 earnings would be hit by recent currency movements."The news is obviously disappointing as not many forecasters would have predicted such further falls in sterling against the dollar," the brokerage said.It also pointed to the fact SPD is radically changing its strategy, adding that this is not without risk.Cantor said it will lead to an increase in debt levels, eliminating the chances of a dividend increase and buyback in the medium term."In the meantime, the company will have difficulty in shrugging off its discount heritage; the currency led downgrade, in our view represents a step down in profitability while the stock is now not 'standout' value on the basis of our revised forecasts."Cantor downgraded its FY17 pre-tax profit estimate to £150m from £185m, taking its earnings per share forecast down to 19.25p from 23.74p.The brokerage said it continues to prefer JD Sports, which it rates at 'buy' with a 1,700p price target, as it has a similar rating, the "unequivocal support" of Nike and Adidas, and clearer visibility on its strategy.Last Friday, Sports Direct said guidance provided in its trading update in September of underlying earnings before interest, taxes, depreciation and amortisation of around £300m was based on a GBP/USD rate of approximately 1.30.In light of recent downward currency movements, it had entered into a hedging arrangement with respect to the GBP/USD rate."Extreme movements overnight resulted in a crystallisation of that rate at 1.19, resulting in a negative impact of approximately £15m on the company's FY17 underlying EBITDA expectation," it said.Sports Direct added that after taking into account the hedging above, if the GBP/USD rate is 1.20 on average for the remainder of full-year 2017, the hit to its FY17 underlying EBITDA expectation would be an additional £20m or so.The statement came after sterling crashed as much as 6% to hit its lowest level against the dollar since 1985. Market participants speculated that it could have been the result of a faulty algorithm or 'fat finger' trade, with low liquidity also thrown into the mix. The plunge also coincided with comments by French president Francois Hollande, who said the EU should take a tough stance with the UK during exit talks.At 1435 BST, SPD shares were down 5% to 279p.