Boohoo’s target price was clipped by analysts at Deutsche Bank who believe there is a “limited line of sight to recovery.”
The target price was cut to 43p from 45p, while the German investment bank remained a Hold on the stock.
Shares bounced on the back of no downgrades in guidance for the current financial year and the “confidence exuded by management with regards to the mid-term guidance."
However, Deutsche Bank notes there is still a tough first half to navigate while weak current trading doesn’t fill the broker with belief sales can recover in the second half.
“The balancing act between margin recovery and investing back into lower price points will be acute but we believe management is aware that double-digit sales growth would be required for sustainable re-rating of the stock by investors,” the broker said.
Improvements in warehousing will help with costs, while quicker delivery times should reignite customer growth, Deutsche Bank said.