SMWH: Future Upside Will Emerge As New Leadership Restores Profit Credibility

Analysts have modestly reduced their price target on WH Smith to about £7.75 from roughly £7.73 per share, reflecting higher perceived risk and mixed broker revisions that balance recent target cuts with selective upgrades.

Analyst Commentary

Analysts remain divided on WH Smith, with recent changes in ratings and targets highlighting both confidence in the company’s long term growth prospects and concern around near term execution risks and earnings quality.

Bullish Takeaways

• Bullish analysts highlighting a Buy stance see upside to around 800 GBp, implying meaningful headroom versus the latest average targets and suggesting the market may be underestimating the company’s recovery potential.
• Supportive views focus on the resilience of WH Smith’s travel led model and its ability to drive medium term revenue growth even in a softer consumer environment.
• The decision by at least one major house such as JPMorgan to maintain a positive rating, despite trimming the target, underscores confidence that current issues are manageable rather than structural.
• Valuation is viewed by bullish analysts as increasingly attractive after recent share price weakness and target resets, with scope for multiple re rating if profitability normalises.

Bearish Takeaways

• Bearish analysts have cut price targets to a range of roughly 650 to 750 GBp, indicating reduced conviction in earnings growth and a lower valuation multiple being applied to future cash flows.
• The sharp reduction in at least one target from above 1,600 GBp to around 700 GBp reflects heightened concern that previously assumed profit growth is no longer realistic.
• Questions around the overstatement of trading profits have increased perceived risk around earnings quality, leading some analysts to step back from more aggressive growth assumptions.
• Downgrades to Hold signal that, while downside may be limited near current levels, execution on cost control and margin restoration will be critical before a broader rerating can occur.

What's in the News

• Group CEO Carl Cowling has stepped down with immediate effect following the independent Deloitte Review announced on 19 November 2025, and will remain employed until 28 February 2026 to support an orderly transition (Key Developments).
• Andrew Harrison, currently CEO of WH Smith's UK division and a former senior executive at Manchester Airports Group and M&S, has been appointed interim Group CEO while the board searches for a permanent successor (Key Developments).
• The leadership change comes after rising scrutiny of WH Smith's earnings quality and trading profit disclosures, increasing investor focus on governance, internal controls, and the outcomes of the Deloitte Review (Key Developments).

Valuation Changes

• Fair Value nudged slightly higher from about £7.73 to roughly £7.78 per share, indicating a modest uplift in the intrinsic value estimate.
• Discount Rate risen slightly from around 12.39 percent to about 12.89 percent, reflecting a marginally higher perceived risk profile or required return.
• Revenue Growth effectively unchanged at roughly minus 2.2 percent, suggesting expectations for a small contraction in top line remain intact.
• Net Profit Margin essentially flat at around 5.34 percent, indicating no meaningful change in profitability assumptions.
• Future P/E increased modestly from about 14.5x to roughly 14.8x, pointing to a slightly higher valuation multiple being applied to expected earnings.