In a report released today, William Woods from Bernstein maintained a Sell rating on Zalando (0QXN – Research Report), with a price target of €21.00.
William Woods has given his Sell rating due to a combination of factors impacting Zalando’s financial outlook. The company’s stock has seen a significant increase in price, approximately 70% over the past six months, yet the underlying expectations have not improved, and the valuation has become more expensive compared to its global apparel peers. This is concerning for a business that is mature with low growth and low margins.
Woods also highlights that Zalando faces several growth challenges. The anticipated growth in online penetration is slower than pre-pandemic levels, and the company already holds a significant market share, making further expansion difficult. Additionally, Zalando’s reliance on the German market is problematic as any demand recovery there is seen as temporary. The company’s strategic moves, such as the acquisition of About You, are questioned for their long-term value, and the B2B growth strategy is viewed as a distraction with limited potential. Consequently, Woods expects multi-year earnings downgrades and a de-rating of the stock.
Based on the recent corporate insider activity of 14 insiders, corporate insider sentiment is neutral on the stock.