- Morgan Stanley analyst Lauren Schenk reiterated an Overweight rating on the shares of Farfetch Ltd FTCH with a price target of $32.00.
- The analyst thinks the complexity and many unknown aspects of Farfetch’s business and four newly announced deals have caused the stock to be mis-priced.
- Schenk sees the investor day as a potential positive catalyst for the stock, given the sell-side and the market not appear to have spent much time digging into each deal.
- The company needs to execute - both in its core business, its new Farfetch Platform Solutions (FPS) partnerships, and in communicating the size and impact of these deals to investors.
- The analyst noted sell side estimates and the current share price do not reflect these deals.
- The analyst expects luxury e-commerce penetration to increase from 12% in 2019 to 29% in 2025, implying an incremental $80 billion up for grabs as brands continue to move away from wholesale.
- Schenk sees Farfetch as one of the few unprofitable tech businesses on the cusp of burgeoning profitability.
- The company’s unique marketplace model checks each box the analyst sees as critical for success in fashion e-commerce - Limited/no inventory risk, especially fashion risk, operates in either luxury price points or low price points, Industries that are becoming more concentrated, like luxury eCommerce.
- Related: Farfetch Shares Fly High As Its Q2 Earnings Firmly Holds The Ground
- Price Action: FTCH shares are trading lower by 1.52% at $7.76 on the last check Monday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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