Boohoo - A Very Bullish Broker Note26 Jun 2020 12:56
Peel Hunt - Friday 26 June 2020
Boohoo’s guidance has been notoriously conservative, meaning analysts have largely ignored it. However, upgraded revenue guidance of 80% growth for the year (up from 60% and ahead of our previous 71% forecast) looks more realistic. We up our own sales forecast to 84% growth, but take on board management’s guided EBITDA margin of 9-10% (we are on 10%) to reflect the increased marketing spend. Our new EBITDA forecast of c£56m represents a c£1.2m upgrade. However, this is offset by higher share-based payments to leave full-year PBT expectations unchanged
The KPI set on all brands remains impressive, with strong growth in actives, order frequency, basket and conversion rate. Trading on over 5x sales, boohoo needs upgrades to fuel the fire. These have come through at a sales and EBITDA level, but are more muted in PBT terms due to non-cash share-based payment charges (relating to the PLT acquisition) and depreciation. Any weakness today represents a buying opportunity.