Berenberg upgrades 4imprint to 'buy'

Berenberg said it was "cautious" about 4imprint throughout much of 2022 as it felt supply chain challenges would "continue to prevent a recovery in gross margin expansion", or at least what it saw as being required to offset rising operating costs.

However, while the analysts said gross margins remained "significantly lower" than pre-Covid-19 levels, it also said this had been "more than offset" by stronger sales growth, better cost control, and better returns in marketing spend.

"In short, the company has proven that operational leverage can kick in. We increase our estimates," said Berenberg, which also hiked its target price on the stock from 2,700.0p to 4,800.0p.

The German bank also noted that its new estimates were predicated on a higher return on marketing spend being sustained, which it acknowledged "does carry some risk", it also said it simply "cannot ignore" the stock's short-term scope for outperformance.

Reporting by Iain Gilbert at Sharecast.com