Primal scream

13 December 2007 By Jeffrey Goldfarb Follow @jgfarb

The investment bank s retail analyst finally said aloud what many inside the bank have no doubt been thinking about the UK retailer. His sell rating won t undo the damage from being associated with the disastrous IPO, but sometimes a holler just feels good.

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Retailer Sports Direct, led by Mike Ashley, floated in March at £3 a share. Merrill was the IPO's global coordinator, bookrunner and sponsor, and Citi and Credit Suisse were joint lead managers. Since then, the company has issued two profit warnings, seen its chairman resign and faced criticism from analysts and investors over a lack of information about the group. The shares are now trading at 95p.

Merrill Lynch retail analyst Mal Patel downgraded the shares to sell on Wednesday with an 80p price target. He forecast a 15% drop in likeforlike sales in the current financial year and reduced his 2008 EBITDA estimate to £130m from £185m.

Ashley received £929m in the flotation. In a rare interview, Ashley told the Sunday Times in July: I've got balls of steel. Some investors have been great and have been very supportive. But some of these City people act like a bunch of cry babies.

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