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.
“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.