Broker snap: Margins a concern at Electrocomponents

Nomura Securities has bumped up its price target for Electrocomponents after the electrical parts company's trading update on Friday, but remains concerned about pressure on margins.'Sales trends have recently improved, which could have geared impact on bottom line,' the broker said, explaining its decision to move up its earnings before interest, tax and amortisation forecasts for the current year and next by around 8%'Earnings upgrades imply lower dividend risk, but we remain concerned about gross margin erosion, particularly as management seems to pursue greater pricing flexibility than before,' said Nomura analyst Marc Van't Sant.Nomura retains its 'underweight' recommendation on the shares but has bumped up its price target to 150p.