Farfetch Platform Solutions Deals Likely To Drive GMV Growth In 2023 And 2024 Despite Macro Headwinds, Analysts Say

KeyBanc analyst Noah Zatzkin maintained Farfetch Ltd FTCH with an Overweight and a $13 price target.

Macro headwinds materialized, largely as expected, with incremental softness versus expectations principally related to FTCH's decision to pull back on demand generation spend in the U.S. to protect order contribution margin (+580 bps Y/Y) as the environment became increasingly promotional.

Zatzkin expects 4Q as no different. He continues to view 2022 as a year of refinement and stabilization and expects more robust growth and profitability in 2023. The 12/1 capital markets day as a potentially meaningful positive catalyst. 

Wells Fargo analyst Ike Boruchow reiterated Overweight with a $25 price target. FTCH delivered a squishy 3Q print as macro factors drag on GMV and margins. 

Boruchow also highlighted some bright spots. China saw improvements in QoQ (with COVID restrictions easing, it should continue to improve into '23).

He emphasized its focus on profitability over growth. Boruchow highlighted more color on GMV and EBITDA drivers over the next 3-5 years, now expected at the upcoming Analyst Day on 12/1. FTCH has the intent to generate positive FCF in 2023.

JPMorgan analyst Doug Anmuth cut the price target on Farfetch to $15 from $16 and maintained an Overweight. The company's Q3 results and Q4 outlook "were light," and the stock will likely be pressured near-term. 

However, Farfetch is sticking to its strategy developed over the past three years of focusing on full-price products and not chasing competitor promotional activity that weighs on margins. The stock's risk and reward are "highly compelling at current levels" and recommends buying the shares on the pullback.

Credit Suisse analyst Stephen Ju maintained Farfetch with an Outperform and cut the price target from $19 to $17. New FARFETCH Platform Solutions (FPS) deals were likely to push GMV growth in 2023 and 2024 despite macro headwinds.

Ju highlighted a significant $300 billion addressable market that remains fragmented and underpenetrated. He emphasized relative protection from competition from larger-cap online competitors. He also added exposure to the rising adoption of luxury goods in APAC and emerging markets.

Price Action: FTCH shares traded lower by 17.8% at $7.52 on the last check Friday.