Barclays PLC (LON:BARC) has knocked 10% off its target price for Boohoo.com PLC (LON:BOO) to 225p from 250p.
In a note to clients, the British bank said the AIM-listed online clothing retailer had been a big under-performer since September 2017, with debate now shifting to questions about its midterm margin sustainability.
READ: RBC slashes target price for Boohoo.com citing unsustainable growth levels
“Concerns have been elevated by the unhelpful signaling of management, and relatives, selling shares after each of the last three results.
“Investors fear more concerning cost headwinds under the bonnet: a perpetuating story. We believe investors are pricing in an EBIT margin cut to c5% vs. base case 7%” the bank added.
Despite the price cut, Barclays analysts retained their ‘Overweight’ rating on the stock, commenting: “We don’t dispute there are real headwinds, but on the balance of probability, we think Boohoo can deliver on margin expectations 2-3 years out.”
The price cut follows a similar action taken by Canadian bank RBC last Wednesday, which saw analysts slash Boohoo’s target price to 125p from 160p citing “less attractive longer-term growth prospects”.