Boohoo (BOO): Target £10+

[Snazzytime]

Came across this video on PIworld: piworld 2020 round up of the year: Paul Scott - PIWORLD

At 10.45 min Paul Scott is asked which of his current holdings (at December 2020) he is most bullish about for 2021.

He says without doubt it is Boohoo, far and away his largest holding. Reckons that without the ESG issues the SP would be double its current price (£3 in 12/20 x2 =£6) and he has a target price of £10+ with a hold forever approach to the stock.

He has suggested to the board that Boohoo consider listing on NASDAQ where they would get a more favourable rating.

Extremely bullish stuff. But then again what do I know - I bought at 30p and sold when it doubled!

Snazzy

ps Confession time - I bought back in at 175p on a dip

[Carcosa]

The NASDAQ listing is often quoted as a way to increase the share price of a company. Sometimes it works, other times it does not. Either way for a listing on NASDAQ it would probably take a long time to come to fruition… 2 years if they started now?..and not without notable costs too.

The ‘problem’ I have with Boo is that PI’s love to day trade the hell out of it coupled with a national press that seems to have it in for the company. I see today there is a story about someone being upset that the dress they ordered had been rebranded. In truth it’s another ‘non’ story elevated to national status.

The other negative aspect with Boo is that in many ways it is perceived as something of a tech stock and traditionally trading on high multiples. In recent times such tech stocks have come off the boil partly as a result of increasing US Gilt yields.

Nevertheless the company is profitable, maintaining high top line growth rates and can forsee that continuing for some time yet.

My feeling is that Boo is genuinely a long term hold and forget type of share because the business is successful.

The question then becomes will someone come along and buy it? Always possible.

I have a reasonably large share holding in BOO… My third largest holding in the portfolio… Let’s see what April brings.

[ramridge]

With BOO getting close to its 2-year low, maybe it’s time to look at it again.
Reading previous posts here and elsewhere, I am amazed at the number of respected analysts and investors who got this one wrong, Paul Scott to name one.
There must a time when you have to stop saying “I am playing the long game…”
Personally, I am baffled. I have only played this stock as a trade, making a modest profit so far.
From a pure technical point of view, the chart is screaming a buy. From a fundamental point of view, it too is screaming a buy!
So why is it that I am still sitting on my hands?
Well, my confidence in this management is frankly zero. Take a fantastic company, put it in the hands of “louche” management, then you get what we have been witnessing with BOO.

The most I am likely to do in the next few days is to take a long position as a trade, when the SP starts to turn, with a tight stop loss to boot.

[MaynardPaton]

Hi Ramridge,

@ramridge

With BOO getting close to its 2-year low, maybe it’s time to look at it again.
Reading previous posts here and elsewhere, I am amazed at the number of respected analysts and investors who got this one wrong, Paul Scott to name one.

To be fair to Paul he was very bullish on BOO after the shares dived to 30p in early 2015.

But the shares have been going sideways for four years now…:

…which I would say would make most BOO investors frustrated rather than wrong Paul was still bullish during June: piworld interview: Paul Scott June 2021 update - PIWORLD

The difference perhaps between Paul and most other BOO shareholders is Paul has real-world insider experience of clothes retail (and actually with the BOO founders), and this experience gives him the conviction to hold during a market/company wobble.

Of course Paul could be wrong, but I suppose much of the PI anxiety about BOO is due to most holders being rather distant from the company’s customer demographic and can’t really assess the popularity of the company first hand.

FWIW I have no strong opinion either way. The recent results showed costs starting to creep up and I wonder whether BOO will always be able to sell £5 dresses at an 8% margin. Some of the ESG issues may in time be solved through extra expenses.

Mind you, the forecasts below suggest a 2024 P/E of less than 13 at 190p:

Maynard

[ramridge]

Hi Maynard
I was only using Paul to illustrate my point that several serious and well respected investors have got it “wrong” with this share - based on recent performance.
I have followed Paul for as long as he has been writing on Stockopedia. He has an incredible record and I rate him as one of top 5 analysts in the UK.

Best wishes, Ram