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Boohoo upgraded to ‘neutral’ by Credit Suisse as news should be more balanced after governance scandal

However, more risks come from the upcoming follow-up report on “Fixing Fashion” by the Environmental Audit Committee

Boohoo Group PLC - Boohoo upgraded to ‘neutral’ by Credit Suisse as news should be more balanced after governance scandal

Boohoo Group PLC (LON:BOO) was upgraded to ‘neutral’ from ‘underperform’ by Credit Suisse as the news should be more balanced after the governance scandal from earlier this year.

The AIM-listed firm was heavily criticised in a recent review of its working practices by Alison Levitt QC then promised to implement a raft of measures to improve its performance, so the Swiss bank saw a significant risk to adopt the report recommendations.

READ: Boohoo confirms PwC is stepping down as auditor, shares slump

However, analysts think the risk and reward is more balanced now, though they trimmed the target price to 300p from 320p.

The Environmental Audit Committee is due to release its follow-up report on “Fixing Fashion” in December and the bank expects it will result in further negative headlines for the fast-fashion retailer.

“While not binding, we believe the conclusions will influence the government’s decision as to how to deal with the issues in Leicester raised in the Levitt report,” analysts said.

“Solutions include factory licencing, an industry ombudsman or delegating to the various government agencies, and we see significant risk to Boohoo’s execution given the scale of change required to its business model and that of its suppliers.”

On the upside, the online giant is expected to reassure investors with trading updates, especially after Black Friday.

Shares rose 1% to 271.25p on Friday afternoon.

Quick facts: Boohoo Group PLC

Price: 300.3 GBX

Market: AIM
Market Cap: £3.79 billion

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