Shares in boohoo, the online retailer now known as Debenhams Group, were little changed after its half-year update, but a broker used the numbers to reaffirm its faith in the turnaround.
Shore Capital kept its 'buy' rating and 35p price target, implying almost 50% upside from the current 24p.
Analysts Katie Cousins and Clive Black said the update offered further evidence that the recovery strategy was gaining traction.
Broker nudges forecasts higher
They pointed to accelerating sales, wider gross margins and the growing marketplace model, where outside brands trade through boohoo's platforms, as signs the business was on the right track.
The pair nudged up their full-year adjusted earnings forecast by 1% to £59.4 million.
More striking was the effect of two recent disposals, the £90 million sale of the Sheffield warehouse and the offloading of the Nasty Gal brand for $16 million.
Leverage set to disappear
Shore Capital said the deals fitted the group's shift to a capital-light, stock-light model, lifting its adjusted pre-tax profit forecast by around 39% to £27 million for the current year.
Crucially, the cash coming in should turn a forecast net debt position of £85 million into net cash of £9 million, wiping out the group's leverage.
The broker was more guarded on the near term, warning that the clothing market remained challenging heading into the second half.
It added that the longer-term investment case still hinged on boohoo proving it can deliver sustainable growth across the wider group.
