- DEBS shares jump more than 6% as Shore Capital upgrades to ‘hold’
- The group’s shares have fallen by around 95% since their June 2020 peak
Boohoo shares jumped on Wednesday after their sharp decline over recent months led to a reassessment by analysts.
The Pretty Little Thing owner, which began trading as Debenhams last month despite pushback from major shareholder Mike Ashley, has seen performance deteriorate since its pandemic peak amid rising costs, greater competition and weaker demand.
It has endured fractious relationship with Frasers boss Ashley, who has so far failed in attempts to reshape the fast fashion group’s board.
Its shares have fallen by around 40 per cent over the last 12 months and roughly 95 per cent since their June 2020 peak of 413p.
But analysts at Shore Capital Clive Black and Katie Cousins upgraded Boohoo to a ‘hold’ rating on Wednesday after its shares fell below the broker’s ‘fair value’ target of 21p.
They wrote in a note that a 35 per cent Boohoo slump since the broker downgraded the group to a sell rating in November has led them to ‘revisit’ the stock.
‘While we believe that the group could face challenges from a tough macro backdrop, the focus on the Debenhams model could yet provide a more sustainable solution, for which further details are expected during the full-year results,’ Shore Capital added.
The rebrand comes after Boohoo rescued the 247-year-old department store chain out of administration for £55million in 2021 after it collapsed during the pandemic.
New look: Boohoo began trading as Debenhams last month
More Debenhams pop-up stores are set to spring up in different locations across Britain amid a major rejuvenation of the brand.
However, it said online ‘will continue to be the focus’ and there were ‘no plans’ to reopen physical stores.
Boohoo shares were up 6.5 per cent to 21.08p.
The Debenhams rebrand marks a major pivot for Boohoo, which typically focused on low-cost fashion aimed at young people.
However, Shore Capital warned the group continues to face significant headwinds.
Analysts wrote: ‘The market backdrop is not overly supportive for DEBS in our view, consumer confidence is low, inflation continues to influence spending and there are concerns about the impact of US tariffs.
‘[We] continue to see better buying opportunities elsewhere in the sector, noting our Buy recommendations on ASOS, JD [Sports], and Next with our warmth too towards Marks & Spencer.
‘We would need to see a notable revenue growth rebound and sustained profitability prospects to become more confident on DEBS noting medium-term expectations for continued losses, to think this firm issued equity at over 300p to acquire Pretty Little Thing, yuk!’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .