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Author: Alan LittleDate: 2021-10-11

Boohoo (BOO) shares dip 2.34% after brokers slash price targets

Credit Suisse and Berenberg both cut their price targets for British fashion retailer Boohoo (BOO) on Friday amid concerns that its recent struggles could continue.

Boohoo (BOO) closed 2.34% down in London on Friday after brokers expressed concerns about the British online fashion retailer’s financial performance following a lacklustre Q2.

Analysts have been bullish about Boohoo in the past for good reason, but following years of strong returns, there are now signs that a pandemic-induced blip could become a long-term malaise.

The Manchester-based company, which targets a younger demographic of 16 to 30-year-olds, recently fell short of quarterly revenue expectations, while underlying margins also retreated.

Boohoo was hit hard by COVID-19 as lockdowns, travel restrictions and delivery disruption all took its toll on its bottom line.

An additional £26m charge linked to carriage and freight rates is also expected to weigh the company down into the second half of the fiscal year.

Analysts are now wondering whether Boohoo will be able to bounce back in the medium term.

In a note accompanying a price target downgrade from 460p to 350p, Berenberg said: “The key question is whether the second quarter was a short-lived blip or a reflection of structural pressures.”

The broker urged investors to approach BOO with “some caution” for now, though it said that the improvement in trading performance through September is encouraging.

Boohoo acquired several Arcadia Brands including Dorothy Perkins in a £25.2m deal earlier in the year and Berenberg noted that these were “performing ahead of expectations”.

Berenberg is not the only broker to be worried though as Credit Suisse also slashed 95p off a new, lower 265p price target for Boohoo on Friday.

The negativity translated to a share decline for BOO on Friday as a 2.34% dip on the London Stock Exchange set a new 187.95p price.

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