Analysts at Oppenheimer cited “improving marketing efficiency and easier comps” at online fashion retailer Farfetch Limited (NYSE:FTCH) as the reason behind its decision to increase its price target on the stock to $7.50 from $7.
Reiterating its Outperform rating, Oppenheimer analysts wrote that they had confidence that contribution margins will improve.
Last week Farfetch reported better-than-expected results for its fourth quarter.
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The firm posted a loss per share of $0.25 on revenue of $629.2 million, beating the expected loss per share of $0.34 on revenue of $626.5 million. Overall, sales fell 5.5% year-over-year while gross merchandise value (GMV) dropped 12% to $1.14 billion.
Farfetch also reiterated its full-year guidance for GMV of $4.9 billion in 2023, which was unchanged.
The team behind Neiman Marcus Group, Reebok, and Ferragomo launches “should drive double-digit growth in (the second half of 2023), combined with easier comps—lapping Russia, China, FX, and reopening headwinds,” according to analysts.
“Farfetch’s marketplace has the potential to disrupt the luxury fashion industry, which has lagged in technology adoption, as Millennials and Gen Z consumers become a higher percentage of consumers,” analysts wrote.
“We believe Farfetch is well positioned with a first-mover advantage to capture market share in the personal luxury fashion goods industry with an estimated tangible addressable market of $430 billion by 2025.”
Shares of Farfetch were trading at $5.30 in New York on Monday afternoon.
Contact Angela at angela@proactiveinvestors.com
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