After an initial rebound in early January, the fashion firm found it difficult to accrue any momentum, spending most of the first quarter stuck veering between £1.70 and £1.90. However, April has seen the stock gain a spring in its step, with Boohoo.com (LON:BOOH) rising to a current trading price, and 6-month-plus high, of £2.24.
Though the company ended up eventually down on the day of its post-Christmas update – mainly due to the relative disappoint of its boohoo and Nasty Gal brands when compared to the performance of PrettyLittleThing – it’s hard to argue it wasn’t a strong one.
For the 4 months to the end of December revenue rose 44%, with its gross margin climbing 170bps to 54.2%. Region by region, the UK saw a 33% increase in revenue, with the Rest of Europe up 57%, the Rest of the World rising 35% and the USA seeing a remarkable 78% surge.
This left boohoo in the position to raise its full year forecasts. The company is now expecting revenue growth of between 43% and 45%, a big improvement on the previous 38% to 43% guidance. Adjusted EBITDA margin forecasts, meanwhile, were narrowed from between 9% and 10% to 9.25% to 9.75%.
Given the sharpness of its recent rise, boohoo could do with hitting the top end of those forecasts on Wednesday. Beyond that, the stock is going to need to give a decent account of its current financial year, and what kind of growth investors can expect at the end of the 12 month period, ideally growth that is slightly more evenly spread across all 3 of its brands.
Boohoo.com has a consensus rating of ‘Buy’ alongside an average target price of £2.26.
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