Up until relatively recently the online electronics retailer was having a rather lacklustre year. Having risen to £1.50 off the back of its third quarter statement in January, the stock gradually drifted back below £1.20 by early April.
A well-received pre-close update on April 6th brought the stock back to life, returning to £1.50 by May. A hard to explain jump in mid-May caused AO World to spike to a 15 month high of £1.80, before pulling back to a current trading price of £1.64.
That aforementioned April update saw AO World state that it expects its full year revenue to come in at £796 million, a 14% year-on-year and just above the mid-point of analysts’ forecasts. In the UK it said its looking at an 8% jump in revenue to £680 million, with the company going on to state that it had achieved growth in the fourth quarter despite a ‘competitive market’ and a ‘limited advertising spend’. As for in Europe, it was less specific with its details, though it did say that it had achieved revenue growth of 55% in local currency.
However, that revenue-positivity was spoilt somewhat by the fact that AO World claimed its earnings before interest, taxes, depreciation and amortisation loss would be somewhere near the middle of analysts’ £1.4 million to £9.7 million estimates.
Whether or not AO World can return to £1.80 next week will be dependent on exactly how severe that EBITDA loss is. Though, some unforeseen disaster aside, the figure should definitely be lower than the previous year’s £12 million loss, investors will obviously have very different reactions based on which side of the mid-point it errs towards.
Ao World (LON:AO) has a consensus rating of ‘Hold’ alongside an average target price of £1.48.
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