Liberum raises target price on Boohoo

Liberum estimates that the deal values 100% of Prettylittlething at £998-1,225m, suggesting a 12m forward 12-15x enterprise value/earnings before interest, tax, depreciation and amortisation ratio - around half of the respective current multiples for Boohoo.

However, the analysts highlighted that the group has likely acquired this stake at a 30% minority discount, suggesting £300-367m value which has not been paid for and, therefore, accrues to group shareholders.

They also noted that Boohoo still retains roughly £350m of net cash to pursue further mergers and acquisitions.

"We forecast £215m of FCF over the next two years, leading to net cash of £476m by year-end FY22E, excluding further M&A," said Liberum, which added that the deal drove its earnings per share upgrades of 13-14%.

"This gives significant firepower to continue developing the group's stable of own brands, broadening its customer base and opportunity set across the global fashion market."