Boohoo.com PLC (LON:BOO) is seeing a surge in US growth that is unlikely to drop away soon suggests broker Peel Hunt, which has bumped up its estimates as a result.
Traction in the US is 'outstanding' currently with third quarter growth of 188% courtesy of a strong autumn/winter range and a collaboration with blogger Jordyn Woods.
This momentum should continue into spring/summer, delivering triple-digit growth, said the broker, which added £1.1mln to its profit forecast for 2017/18 (end-February) after the December trading update, but has now raised it by a further 11% to £36.4mln.
“We consider our assumptions to be conservative and see scope for further upgrades,” the broker added.
It was the detail of peak trading and the driving force behind the US traffic and conversion growth that provided the confidence to upgrade, it said.
Boohoo’s international business generates around 40% of revenues, with the US the biggest overseas territory at 14% of total sales.
But though it is now rated more highly than its AIM -listed rival ASOS (LON:ASC), it is still a relatively small business.
“With boohoo’s underlying growth outstripping expectations and leaving 2-3 years forecasts looking conservative, combined with Pretty Little Thing (PLT) coming into the group as a new revenue stream, scope for Nasty Gal to leverage group assets and menswear also quietly delivering material progress, we continue to see strong momentum.”
Buy with a target price of 180p (160p previously) is the Peel Hunt investment view.
Shares were 141p today.