JP Morgan initiates Boohoo at 'overweight'

JP Morgan said Boohoo's multi-brand strategy, supported by its "test and repeat" model, had historically supported above sector average sales growth and margins.

However, the analysts said Boohoo had recently experienced "a material fall from grace", as it faced allegations that working conditions in UK supplier factories were not "socially responsible".

"Material steps forward in the supplier auditing processes had already been planned for 2020, and these are now being accelerated, backed by higher investment and third-party specialist support," said JP Morgan, which issued the group with a 415.0p target price.

"We believe that this increased focus puts Boohoo on the right path to start rebuilding confidence in the group's social responsibility."

JP Morgan added that it does not see Boohoo's "test and repeat" model as being under threat, with the group having already demonstrated its ability to roll it out to overseas suppliers, if necessary.