Boohoo Group PLC

Boohoo Group PLC (LON: BOO) is an FTSE AIM 100 listed Online Fashion Retailing Company. The Company was founded in 2006 and has grown rapidly in the UK and internationally.

Investment Rationale – SELL at GBX 97.96

• Profit Booking: Boohoo’s stock price has jumped over 25% in the past 5 days, and thus, investors can evaluate profit booking as per their risk-return profile.
• Trading Update: As per the trading update released on 10 March 2022, Boohoo showed revenue growth in Q4 FY22; however, it highlighted a slowdown in core earnings due to supply chain pressure.
• Gloomy Outlook: The year 2022 is expected to be the year of inflation, Central Bank tightening, Ukraine war crisis, and wage pressure. All these factors can hurt the corporate profits and equity markets.
• Emerging Risk: There is constant pressure related to cost inflation, supply chain barriers, and subdued demand outlook.
• Technical Indicator: From a technical standpoint, 14-day RSI (~58.64) is moving towards the overbought position, following the recent spike.

Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)    

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

Conclusion

Based on the slowdown in earnings, longer customer delivery times supply chain snags, bearish technical indicators, coupled with the unfavourable Valuation conducted above, we have given a "SELL" recommendation on Boohoo Group PLC at the current market price of GBX 97.96 (as of 18 March 2022, at 10:45 AM GMT).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.

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