AO World PLC (LSE:AO.) shares rose 8% to 96.2p in early trading after the online electrical retailer flagged stronger-than-expected profitability and continued market share gains, with analysts at Peel Hunt highlighting scope for further upside despite already upbeat forecasts.
In a trading update for the year to 31 March 2026, the group said total revenue is expected to increase by around 11%, with B2C sales up 9.5% as it continued to gain share across core categories. Adjusted profit before tax is now expected to land at the top end of its £45–£50 million guidance range, representing roughly 15% year-on-year growth and outpacing revenue expansion.
Cash generation also strengthened significantly, with free cash flow forecast at about £65 million, up from £23 million a year earlier. AO expects year-end liquidity of around £200 million, underpinned by improved operational performance and tighter working capital control.
Founder and chief executive John Roberts said the “numbers speak for themselves again”, adding that the group’s “shared economics” model and membership approach continued to drive momentum across key performance indicators. He also pointed to AO’s progress toward becoming the first company globally to reach one million Trustpilot reviews while maintaining a 4.9 rating, describing it as evidence of a structural advantage built through logistics scale and customer service.
AO also highlighted extensive hedging, covering around 80% of forecast fuel usage and all electricity requirements through FY27, helping insulate the business from recent geopolitical volatility.
Peel Hunt said the update was consistent with prior guidance and its own upgraded forecasts, noting that implied revenue of £1.26bn was in line with expectations and that management’s profit guidance sits at the top end of the £45–£50 million range. The broker left forecasts unchanged but pointed to stronger-than-expected cash generation, with free cash flow implying year-end net cash of around £80 million, well ahead of its estimates.
The broker added that capital allocation is likely to come into sharper focus going forward, and reiterated a 'Buy' rating with a 137p price target. It also pointed to valuation support at around 12.6x FY27 earnings and a c.9% free cash flow yield, arguing that longer-term success could translate into a substantial expansion in both revenue and profitability if market share gains persist.