Stock of the day 24/09/2015 – Boohoo.com PLC

It would be too easy to make a pun on just how badly Boohoo.com started its first full year of trading; yet since then the stock has gradually picked itself up and dusted itself off.

Can the company’s recovery continue next Tuesday following its half year interim results statement?

Boohoo wasted no time in making life difficult for itself. After opening the year at 39.4p, the stock plummeted over 40% on January 7th to 22.3p as the company issued a profit warning centred on the dual pressures of Christmas delivery problems and heavy high-street discounting, pressures that caused Boohoo’s sales growth to half from 50% to 25% in the final quarter of 2014.


(Source: IT-Finance.com 24/09/2015)

Things did begin to improve from this point onwards, however. After languishing around the 25p mark for the first 2 months of the year, its update on March 11th (3 days shy of the year anniversary of its IPO) sent the stock over 12% higher to 28.6p. In the report the company announced a 27% climb in full year revenue to £139.9 million (better than expected by far below the 50% growth seen the year before), alongside a 29% jump in overall active customers year-on-year to 3 million.

Whilst the stock initially fell away from its post-update high, by the end of April Boohoo had crossed the 30p for the first time since its precipitous fall at the start of the year. However, despite confirmation of its 27% increase in full year revenue, and news of a 3% rise in pre-tax profits to £11 million for the year ending February 28th, Boohoo’s start of May preliminary results statement failed to contain anything to make investors forget about the sharp drop-off in growth year-on-year, sending the stock back to its familiar 25p mark by the end of the month.

Yet this was to prove a minor blip for Boohoo; its June 10th update pushed the stock back towards the 30p mark as the company announced total revenue of £41.3 million for the 3 months to May, something that translated to a 27% increase in sales and a 32% rise in customers to 3.3 million. This put Boohoo on track for (very) steady growth in the following 4 months, culminating in a start of September surge to an 8 month high of 35p on September 11th. It is currently trading at 31p (It-Finance.com, 24/09/2015).

Boohoo.com has a consensus rating of ‘Buy’ and an average target price of 40.63p, with many analysts holding bullish expectations of its half year statement next week.