AO World PLC (LON:AO.) has a “compelling long-term growth story” and is set to benefit from recent market shifts, according to analysts at Jefferies.
In a note on Monday, the broker upgraded the online white goods and electronics retailer to ‘buy’ from ‘hold’ and retained their 400p price target, saying they saw the stock as “an attractive entry into a structural winner with a huge long-term growth runway”.
READ: AO World plans investment to boost operations and gain market share
“AO's recent FY21 results marked an outstanding year with revenue growth of +59%, group [earnings] +191%, and positive trends across categories, KPIs and countries. The pandemic clearly presented a substantial tailwind, but we think much of what was achieved equally reflects the fundamental qualities of AO’s business model and the substantial investments made during the year. Moreover, we think many of the benefits are set to roll into future years”, the broker said.
Jefferies added that AO was making the right investments in its business and that these spending choices were “building awareness, driving scale, and leveraging the group’s assets”.
“We view AO as a compelling long-term growth story - a best-in-class customer proposition and vertically integrated model, set to benefit from enduring market shifts, scale and expertise advantages, and a growth outlook augmented by new categories, services and countries”, the analysts said.
Shares in AO jumped 3.1% to 239p in late morning trading.