RBC Lifts 3i Group's Price Target After Fiscal Q1 Performance Update

06:38 AM EDT, 07/27/2026 (MT Newswires) -- RBC Capital Markets raised its price target for 3i Group (III.L), noting the British investment company's main investment, Action, reported better-than-expected second-quarter performance. "3i reported a better Q1 portfolio update last week, with Action's Q2 EBITDA margin better than feared. As a result, we have raised our FY27-28 NAV/share forecasts for 3i by c.3-4%. We note a stronger seasonal performance from Action towards the end of the quarter, and we acknowledge easier comps to come. Even so, we think we need to see a more consistent topline trend from 3i Group and stronger margins in H2 to justify the valuation," analysts said Monday in a note focused on European retailers. The research firm warned that the outlook for European discount retailers is "tougher" amid squeezed lower-income budgets and escalating competition, with pressures especially pronounced in Action's largest market, France, and in Germany. "That being said, we have noted an improved trend more recently, but we are conscious that that has coincided with a pickup in seasonal and cooling products given European heatwaves and [like-for-like] trends outside of the seasonal windows have been inconsistent. We are cautious around an expansion into the US, as we think this may take more time and investment than anticipated. As a result, although we acknowledge 3i's good longer-term track record, we think the performance now may be below history and so we think an implied P/E for Action of c.25x CY27e looks on the fuller side," the note said. Against this backdrop, RBC increased its price target to 21 pounds sterling from 20 pounds, with an underperform rating.