Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Canaccord Genuity raises target price on AO World

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on electrical retailer AO World from 52.0p to 75.0p on Wednesday after the group's trading update last week led the broker to adjust its FY24-26 estimates. Canaccord Genuity said while the update provided a beat on consensus adjusted pre-tax profits, AO had still missed revenue expectations, with FY23 revenue set to decline 12%. Moving forward, the Canadian bank also believes AO's +10-20% top-line growth targets look "overly ambitious", while the margin recovery story has more or less played out.

Therefore, trading on an FY25E FCF yield of just 4.1%, Canaccord believes AO World to be "overvalued", leading it to retain its 'sell' recommendation for the stock.

"While the headline EBITDA multiple appears undemanding, post over £20m of lease charges associated with an inefficient hub and spoke model, in our view, FCF narrows to just £24m (conversion on EBITDA of just 35%), leaving AO trading on a cash FY25E PER of c.25x. Therefore, with easy wins made and questionable growth targets, we retain our 'sell' recommendation," said Canaccord.

Reporting by Iain Gilbert at Sharecast.com

Share this article

Related Sharecast Articles

Goldman Sachs downgrades SSP to 'sell', prefers WH Smith
(Sharecast News) - Goldman Sachs downgraded SSP on Monday to 'sell' from 'neutral' "on a relative basis" as it took a look at European travel concessions.
UBS to book $900m provision over Greensill supply financing funds
(Sharecast News) - Swiss banking giant UBS announced on Monday that it expected to book a provision of about $900m related to Credit Suisse's funds, tied to the collapsed supply chain financing firm Greensill Capital.
Citi downgrades European equities to 'neutral'
(Sharecast News) - Citi downgraded its stance on European equities on Monday to 'neutral' from 'overweight' as it said near-term risks have increased, with markets narrowing and political uncertainty taking centre stage.
Hutchmed publishes positive sovleplenib trial results
(Sharecast News) - Hutchmed China announced the publication of positive results from its phase three 'ESLIM-01' trial of sovleplenib in the Lancet Haematology.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.