Card Factory downgraded at Berenberg following profit warning

(Sharecast News) - Analysts at Berenberg downgraded Card Factory to 'sell' on Tuesday, noting that the firm's "weak" first half trading update made it look like the retailer was "struggling to find momentum".In addition to changing its stance on Card Factory from 'hold' to 'sell', the broker also cut its target price on the greeting card retailer from 190p to 150p, saying that, although comparatives were set to soften slightly in the second half, the group's trading was set to continue to be subdued "for the rest of the year".Earlier in the month, Card Factory had warned investors that full-year underlying earnings would be down on the previous year on the back of uncertainty about Brexit and "extreme" weather conditions.In a trading update for the six months to the end of July, the group said it now expects full-year underlying earnings before interest, taxes, depreciation and amortisation of between £89m and £91m "dependent on the key fourth-quarter trading period", down from last year's £94m.But Berenberg was concerned about the company's dependence on its fourth-quarter trading period in order to meet its lowered guidance of £89-91m."While we acknowledge that the weather has had an impact, we believe footfall will continue to decline year-on-year, especially given the weak outlook for the single greetings card market, which represents over 50% of group revenue," Berenberg said.Linked to the above, they also believed that the company's special dividend was likely to fall towards the lower end of its guidance for between 5p to 10p pr share."As such, with the outlook becoming increasingly uncertain, we reduce our price target to GBp150 and downgrade to 'sell'," the analysts concluded.