- JMP Securities initiated coverage on Farfetch Ltd FTCH with a Market Perform rating.
- Farfetch Limited is a dominant platform within personal luxury retail, and the analyst expects it to strengthen this position through its robust solutions offering.
- However, near term, challenged upper funnel trends and relatively low consumer savings rates may hinder growth somewhat.
- The analyst thinks the contribution from FTCH's recently announced partnerships and its pending minority-stake acquisition of YOOX NET-A-PORTER is currently reflected in FTCH's multiple.
- Therefore, the analyst sees limited upside to FTCH's equity value over the next twelve months.
- The analyst estimates personal luxury retail within FTCH's serviceable obtainable market was $53 billion in 2022, where FTCH captured 7.7% market share.
- By 2025, the analyst expects Farfetch's share to grow to 13.7% of a $76 billion market share, largely through previously announced partnerships.
- Though the size of FTCH's opportunity is large, the long-term secular growth is coming from China, said the analyst.
- Given the track record of non-Chinese companies success in the country, the analyst sees risk to FTCH's ability to scale the country to similar penetration rates as the U.S., added the analyst.
- The analyst sees active buyer growth as a key factor in FTCH's ability to capture the larger opportunity ahead, particularly since there has not been meaningful growth in TTM GMV/Active Buyers.
- Price Action: FTCH shares are trading lower by 6.75% at $4.36 on the last check Friday.
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