B&M (LON: BME) shares gained over 1% during Monday’s session after the stock was lifted by RBC Capital analyst Richard Chamberlain.

The rise puts BME shares up over 19% in 2023, trading around the 495p mark, although it is down over 17% in the last 12 months, below its January 2022 highs of around 650p per share.

Chamberlain lifted the stock to Outperform from Sector Perform, raising the firm’s price target on B&M to 550p from 460p on Monday. 

The analyst argued in his note that B&M is still trading at a discount to domestic and international peers. However, he believes it should offer amongst the highest, most robust growth in the sector.

Our view: Given the current macroeconomic conditions, with inflation still at highs, B&M, and other discount retailers have gained traction amongst consumers. 

The flight to discount retail has been underway for some time, and B&M has benefitted, with customers trading down and the stigma surrounding shopping at discount retailers almost disappearing. 

During the pandemic, visits to B&M’s website surged, but what’s more surprising is they have remained stable at highs for a considerable period despite lockdown restrictions having been long gone. 

This may be in part due to the company launching a trial home delivery service in the summer last year. Even so, its online revenue only accounted for a tiny percentage of its overall sales in the 26 weeks to September 24, 2022.

Nevertheless, while RBC is slightly late to the bullish party, we agree that B&M shares still have upside potential.

By Sam Boughedda