French Connection: Bear squeeze should lead to 50p plus

Shares of French Connection are back in the frame this week as a takeover situation develops. It is surprising that we have not seen the retailer as a red-hot contender on a regular basis.

French Connection (FCCN): Bear Squeeze Should Lead To 50p Plus

The High Street has been and continues to be a battlefield of the most cut throat variety, especially given the way in recent times it has been both enhanced and degraded by the online revolution. For many though, it may be said that French Connection was one of the fashion retailer heroes of the 1990s which has since been in decline when faced with upstart rivals such as Zara and Ted Baker. However, it could very well be that in the aftermath of the Brexit Referendum, with the Pound sinking like a stone, the company has come into positive focus as a potential bargain to a foreign buyer. If nothing else this would be off the back of the idea the company is now at bargain basement prices itself, with the added attraction that even after recent attention the stock is relatively low in its recent trading range between 30p – 50p. Even if there is no bid forthcoming, we have a situation where there should be relatively little downside. If the main 30p – 35p zone holds, one would expect a 50p year end technical target, with or without any M&A.