Written by Sinad Karahimetovic
Shares of Farfetch (NYSE:) fell nearly 6% after a Citi analyst began research coverage on Sell.
The target price of $6 indicates a 30% downside risk compared to Friday’s closing price of $8.57. While the analyst says the company has “best-in-class technology,” he sees a clear path to profitability.
In this regard, he sees three main risks associated with FTCH stocks.
No YNAP treatment as a transfer to EBITDA margin, a deal arguably more relevant to Richemont;
Except for the positive contribution from the Off-White license, EBITDA is still far from break-even and benchmarking key metrics with peers highlights areas of weakness; And the
The 2025 break clause on the Off-White license poses significant risks (approximately $100 million) to EBITDA.
As far as the following catalysts are concerned, the analyst is naming the upcoming CMD, which will likely take place before the end of this year.
Elsewhere in Citi’s European online retail coverage, the company launched Zalando (OTC:) in Neutral at €22 per share.
“While we like the long-term investment story (including 3P ambitions), we believe the risk of short-term earnings remains high and a reclassification appears unlikely until we return to double-digit sales growth,” the analyst concluded.