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JPMorgan starts Superdry at 'overweight', likes global appeal
JPMorgan Cazenove initiated coverage of fashion brand Superdry on Thursday at 'overweight' with a 2,170p price target, highlighting its global appeal.
The bank said that the brand's e-commerce relevance, strong digital and social marketing strategies and a global omni-channel platform are real assets, underpinning growth across all channels, with opportunities to further expand across categories such as womenswear and sport and geographies.
"The group has, in our view, fully embraced the future of retailing and is well ahead of the curve in having e-commerce relevance, a modern and efficient omni-channel infrastructure and the skillset and capabilities required to communicate with consumers in store and online. We see Superdry's focus on digital and advanced use of technology as key enablers to winning with digitally enabled consumers."
In addition, it reckoned the company will be able to increase cash generation and grow net cash, giving the basis for further cash to be returned to shareholders.
JPM said it expects Superdry's return on capital employed to improve from 25% in FY17 to 30% in FY20 and for free cash flow to more than triple to £77.7m in FY20.
It pointed out that following the company's first store opening in London in 2004, it is now present across 148 countries. "We believe the brand resonates well with the growing millennial population and remains well positioned to further expand across countries and product categories."
At 1620 GMT, the shares were up 1.3% to 1,766p.