Boohoo shares set to rebound after UK supply chain scandal
The online fashion retailer continues to see its shares rebound despite its UK supply chain scandal and allegations about pay and conditions at Leicester city factories selling clothes to the firm.
Boohoo shares continue to rebound effectively following its UK supply chain scandal and allegations about pay and conditions at Leicester city factories selling clothes to the firm.
The online fashion retailer saw its share price fall close to 50% after the scandal was made public, with the stock falling to a low of 210p in mid-July.
Since then, however, the stock has been on a tear, climbing 54% since its mid-July low and looking capable of returning to its pre-scandal highs of more than 400p in the weeks ahead.
Boohoo closed 2% higher on Monday at 324p per share, with the stock up 8% year-to-date (YTD), which means it continues to outperform the broader market, with the FTSE 100 still 19% down YTD.
Analysts believe Boohoo will hit 372p in 2020
Analysts covering Boohoo have echoed investors’ sentiment, with their average 12-month price target for the online fashion retailer sitting at 372.50p per share.
Based on where the stock closed on Monday, analysts average price target implies a potential upside for Boohoo of 15%.
However, given the pace of Boohoo’s recovery in the wake of its scandal, you could forgive investors and analysts for believing the stock will push on to higher highs in 2020 and beyond.
Therefore, despite downgrading its share price target from 500p to 345p in the wake of the UK supply chain scandal, analysts at Goldman Sachs were the most upbeat among their peers, with its earlier assessment potentially achievable if Boohoo can maintain its momentum moving forward.
Boohoo remains well-positioned over high street rivals
Despite the online fashion retailer’s recent scandal, the company is still better positioned than many of its high street rivals, which are struggling amid the coronavirus pandemic, with its share price still capable of making significant gains.
High street fashion retailers meanwhile have performed dismally in comparison to their online counterparts, with Next, Hennes & Mauritz (H&M) and Zara-owner Inditex all down more than 14% year-to-date.
Online fashion is set to triple this year, accounting for around 23% of all European sales in 2020, with the shift away from the high street accelerated by the viral outbreak, according to analysts from Bernstein.
‘The sudden closure of all apparel retail stores across all major global markets has shaken up the channel mix in an unprecedented way this year,’ Bernstein analyst Aneesha Sherman said in a note. ‘[It's] five years' worth of growth achieved in about six months.’
How to trade stocks with IG
Looking to trade Boohoo and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Boohoo’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on stock opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
