Zalando (0QXN – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst William Woods from Bernstein maintained a Sell rating on the stock and has a €23.00 price target.
William Woods has given his Sell rating due to a combination of factors concerning Zalando’s growth prospects and valuation. The company’s growth expectations are considered overly optimistic, especially given the challenging consumer environment. Despite management’s efforts to drive growth through increased marketing spend and strategic investments, the anticipated growth rates appear difficult to achieve. Woods highlights that the company needs to significantly accelerate its growth to meet its own guidance, which seems unlikely.
Additionally, the valuation of Zalando’s stock is seen as high, trading at a multiple that does not align with the expected lower growth rates. The stock’s current price-to-earnings ratio is considered excessive, especially when future earnings downgrades are anticipated. This misalignment between valuation and growth potential leads Woods to believe that the stock is overvalued. Consequently, he prefers other companies, like Inditex, which offer better quality growth prospects.
According to TipRanks, Woods is a 4-star analyst with an average return of 6.9% and a 59.06% success rate.