Key points:
- Boohoo shares are down 76% in 2022
- The company is the most shorted London-listed stock
- Liberum downgraded Boohoo to Sell on Wednesday
Boohoo (LON: BOO) has had a tough year. Its shares are down over 76% in 2022, and following Tuesday’s rally, it has now given up those gains, with a 9% fall yesterday and an over 2% decline so far in Thursday's session.
The current macroeconomic environment has significantly affected the business as shoppers initially headed back to stores, and then soaring inflation hit consumer wallets, resulting in a fall in demand for Boohoo products.
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The current situation resulted in Liberum analyst Wayne Brown downgrading Boohoo to Sell from Hold on Wednesday, setting a 35p price target on the stock. The analyst told investors in a note that he sees a “hard slog from here” for Boohoo due to cost headwinds and market losses for Shein. He added that the company has “much to do.”
That sentiment is shared by other analysts, with Canaccord’s Karl Burns recently initiating coverage of Boohoo with a Hold rating and 35p price target, saying he has concerns about the macro backdrop and that it will likely put continued pressure on Boohoo's core business.
In addition, Morgan Stanley analyst Miriam Adisa recently lowered the firm's price target on Boohoo to 40p from 56p, maintaining an Underweight rating on the shares, while Deutsche Bank’s Adam Cochrane downgraded Boohoo to Hold from Buy, cutting the firm’s price target on the stock to 36p from 140p.
Cochrane explained in his note that his view that online sales would return to structural growth after one year of post-COVID normalization has been wrong, and he sees Boohoo having to face more competitive challenges, with further potential disruptions to come.
According to TipRanks, out of 11 analyst ratings, eight see the stock as a Hold, and three see it as a Sell, with none at Buy. The average price target is 40.9p.
Furthermore, Boohoo is still the most shorted London-listed stock.