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Boohoo.Com PLC

Shore Capital removes ‘buy’ recommendation for boohoo, says shares are ‘fairly valued’

Boohoo shares have shot up by more than a fifth over the past month, following a strong set of full-year results

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Shore Capital likes Boohoo, but sees little value in the shares right now

City broker Shore Capital has removed its ‘buy’ recommendation for online fashion retailer boohoo group PLC (LON:BOO), claiming that the shares are now fairly valued after their recent surge.

Shares are up by a fifth since the end of April, when boohoo reported a near-50% year-on-year jump in annual revenue and earnings.

READ: boohoo posts sharp rise in 2018 profit and sales

To put that share price rise in perspective, the AIM All Share has treaded water over the timeframe, while rival ASOS plc (LON:ASC) has dropped almost 10%.

“We believe that given the recent share price rise the shares look up with events, for now,” read a note to clients.

“In our valuation analysis we use a number of metrics, EV/sales, EV/EBITDA and P/E valuations, and blending these averages 247p per share. Given the current share price of 241p, this suggests that the shares are fairly valued for now, and as a result we downgrade our recommendation from ‘buy’ to ‘hold’.”

As for the new chief executive, John Lyttle, who joined from Primark a couple of months ago, Shore Cap said it was “still early days” but that it expects him to “evolve further” the current global multi-brand strategy, rather than look for a “radical revolution”.

boohoo shares were down 1.7% to 236.9p on Monday afternoon.

Quick facts: Boohoo.Com PLC

Price: £2.70

Market: AIM
Market Cap: £3.14 billion
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