Liberum bumps up Boohoo price target

The broker, which kept its ‘buy’ rating on the fast fashion retailer, said the company’s strategic capital raise "affords it a command and control approach unlike any other branded fashion player we know of".

"Its war chest of £500m will, if used, change the size and shape of the group, embedding its position as one of the fastest growers in global fashion."

Last week, Boohoo raised just under £200m in a placing to take advantage of M&A opportunities.

Liberum said this was "a decisive move by management and one that truly signals how the shape of retail will change post Covid-19".

It noted that historically, Boohoo has bought brands and not the stores when it has acquired distressed assets. It said this was unlikely to change, so any future transactions will likely involve taking ownership of the brand and maybe the digital assets, but certainly all the brand rights.

"So the sum of £200m gives it significant clout and we see the potential for many deals but within this we suspect some large brands could be acquired."

Liberum said that while the coronavirus outbreak may have tempered recent demand, there is still growth in all of Boohoo’s brands and geographies, no inventory overhang and margins are well underpinned.

"The model is impressively agile versus its closest peers, but it is Boohoo’s expanding stable of brands where its long-term value truly sits."

At 1315 BST, the shares were up 1.3% at 344.27p.