Berenberg initiated coverage of Boohoo at ‘buy’ on Monday even as it conceded that shares of the scandal-hit fast-fashion retailer are “not for the faint-hearted”.
The German bank said Boohoo shares have de-rated dramatically in comparison with peers since reports of failings in its Leicester supply chain in July last year.
However, it also noted the group has begun to make changes to the working practices in its supply chain. Berenberg said there were some additional steps it would like the retailer to take but that importantly, it reckons Boohoo can make changes while maintaining its sector-leading growth and margin profile.
The bank, which set a price target of 460.0p on the stock, forecast revenue compound annual growth of 27% in the coming three years.
“We do not think that the supply chain changes are likely to affect the group’s competitive advantages materially, and we show that negative publicity over summer 2020 had no noticeable impact on consumer sentiment,” it concluded.
Analysts at RBC Capital Markets raised their target price on equipment rental firm Ashtead from 3,200.0p to 3,800.0p on Monday following the group’s recently published third-quarter earnings report.
RBC Capital stated that while underlying upgrades to 2022 underlying earnings estimates and post-third quarter earnings per share had been offset by “adverse FX movements”, the analysts stated Ashtead’s forthcoming capital markets day looked set to be “a positive catalyst for the stock”,
However, for the most part, RBC’s analysts seem to feel Ashtead’s recent share price performance and valuation already reflected this, with the stock currently trading at the top end of its historical range.
Although the Canadian bank hiked its price target on the stock by 600.0p to reflect higher mid-term growth and greater industry pricing discipline, the analysts continued to rate Ashtead at ‘sector perform’.
“Though the sharp rebound in activity in 2020 may support the argument that any future short shocks will not materially impair the fundamental long-term value of the business, AHT remains both operationally and financially leveraged and the industry’s rate resilience is untested in any protracted economic downturn scenario,” said RBC.
Jefferies has upped its price target for Entain on the growing success of gaming joint venture BetMGM.
The bank said that BetMGM, Entain’s gaming joint venture with US casino group MGM, had “real momentum, with an 18% US market share and number position in iGaming in January. A BetMGM update on 21 April will likely further fuel interest and raise execution confidence”.
It continued: “Entain’s equity story is highly appealing, with double-digit online revenue growth, online scale, proprietary technology, balance sheet scope for M&A and US upside from BetMGM.”
The bank lifted its price target to 1,850.0p from 1,500.0p and said there was around 25% upside.
Jefferies, which has a ‘buy’ rating on the blue-chip, also updated its estimates on Monday, with earnings before interest, tax, depreciation and amortisation now forecast to be -3%, +3%, and -1% for 2021, 2022 and 2023, respectively.
“An almost doubling of the BetMGM joint venture losses and an increased tax change explain the charges,” it said. “The mix of profit changes for the 2021 full year, with lower retail profitability due to ongoing lockdowns, offset by stronger online.”
