Shares in Currys plc (LSE:CURY) dropped more than 6% on Monday after RBC Capital Markets lowered its rating on the U.K. electronics retailer, citing concerns about the stock’s limited room for further gains following a strong rally earlier in the year.

RBC cut its recommendation from “Outperform” to “Sector Perform”, noting that the stock’s 31% year-to-date rise has significantly narrowed its valuation appeal. While maintaining a price target of 140p, the analysts now see just 14% upside from the latest closing price of 124.30p.

Despite dropping the “Speculative Risk” label thanks to Currys’ strengthened balance sheet, RBC flagged that the company is now trading at roughly 11 times its projected 2025 earnings, a premium compared to its five-year average multiple of 8x, and close to the upper limit of its historical range.

According to the note, Currys’ valuation no longer appears discounted, and other retailers—like B&M and Avolta—may offer more compelling growth prospects at current levels.

Currys has been in recovery mode since late 2023, supported by strategic actions such as the divestment of its Greek business, which has made the group more attractive to investors. The company has also ramped up efforts in underpenetrated categories, including Computing, Mobile, and Health & Beauty, while continuing to expand its Services and B2B segments.

Currently, B2B accounts for just 3% of U.K. sales, compared to 12% in the Nordics. Management is targeting to double the U.K. contribution within three years, although macroeconomic factors could slow progress.

RBC remains cautious about external pressures—particularly in Nordic markets, where despite falling interest rates, consumer sentiment in Sweden and Finland remains weak, with only Denmark showing encouraging signs. In the U.K., easing real wage growth and looming tax-related uncertainties may dent consumer confidence in the months ahead.

While Currys has enjoyed multiple earnings upgrades during fiscal 2025, RBC said that forecast momentum is beginning to slow. It trimmed its FY26 and FY27 earnings-per-share (EPS) forecasts by 1%–3%, citing anticipated increases in financing costs. Revised EPS forecasts now sit at 11.7p for FY26 (down from 13.0p) and 12.6p for FY27 (previously 13.0p). However, operating profit projections remain largely intact.

Currys is expected to post modest top-line growth, with revenue increasing from £8.71 billion in FY25 to £9.07 billion in FY26, and further to £9.35 billion in FY27. Operating profit is forecast to rise from £237 million in FY26 to £249 million in FY27, with EBIT margins holding steady between 2.6% and 2.7%.

As of the end of FY25, Currys reported net cash of £184 million, and is on track to eliminate pension contributions by FY27, down from £78 million this year.

RBC’s valuation is based on a blend of discounted cash flow (DCF) and sum-of-the-parts analysis, estimating a fair value of 134p. In a downside case—where revenues and margins deteriorate—the share price could fall to 90p, while a more optimistic scenario sees potential upside to 175p if performance beats expectations.

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