The investment banking arm of the London bank said the current valuation was “fair” with all the upside and downside risks already baked in as it initiated with an ‘equal weight’ rating and £27 target price.
Analyst Boris Vilidnitsky praised Ted’s “strong growth profile”, stable margins and recent investment into its online offering but admitted he had “significant” concerns about long product lead times compared to its peers and how licensing deals with tile and plate makers might “reduce credibility” in its core premium fashion category.
For all that, the analyst doesn’t expect any of those points to impact the share price, positively or negatively, any time soon.
“The risks mentioned above, although significant, are unlikely to materialize or impact the share price in the near term, in our view,” wrote Vilidnitsky in a note on Wednesday.
“At the same time, we believe that the positives are well-understood and unlikely to be major catalysts.”
Vilidnitsky notes that other premium names such as Hugo Boss and Burberry Group PLC (LON:BRBY) are comparatively cheaper based on predicted earnings per share, although he does feel that Ted justifies its premium because of its strong brand.
That said, he still adds: “We find it difficult to see upside potential from current valuation levels, given limited catalysts and the longer-term risks we have discussed.”
Shares fell 2.1% to £25.39 on Wednesday morning.