Boohoo's competitive advantage sees Barclays upgrade after internet research

Analysing ComScore and Google Trends for signs of progression in June, July and August showed "good trends" for core
Boohoo in the UK and "extremely strong progression" for PrettyLittleThing.com as sequential growth is accelerating.

PLT is getting almost as many visits as rival Missguided, which generated revenues of £120m in its last full year, leading the bank to upgrade its UK forecasts.

"Since initiating in March, it has been clear to us that Boohoo has a competitive advantage in its supply chain and ecommerce only model that will yield share gains for many years to come, but we haven’t been able to get comfortable enough on forecasts to find the valuation appealing. This has changed," Barclays said in a note to clients, moving the stock to an 'outperform' rating from the prior 'equal weight'.

The independent online data provides confidence on current trading going into interim results on 27 September.

Further analysis looking at the US suggests that the Nasty Gal website is not yet fully re-launched and "we do expect marketing to increase this year", while Boohoo and PLT continue to rapidly expand Stateside.

Although Boohoo is an "expensive stock" at 55.5 times calendar 2018 forecast earnings, comparing it to internet peers on a growth adjusted basis with different earnings scenarios, the new higher forecasts and with more confidence on upside for years beyond, "we think the risk reward now stacks up".

"There are still question marks about long term margins beyond FY18E with a new warehouse coming and limited tech spend today. But upgrades trump these concerns in our assessment of the share price performance nearer term."

The target price was upgraded to 265p from 220p.