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NS Adore Beauty Group Co., Ltd. (ASX: ABY) Stock prices are valued as buys with attractive capital growth over the next 12 months.
For readers who don’t know what Adore Beauty is, it’s an e-commerce ASX stock that sells thousands of different products from hundreds of brands.
But what does it do? What do analysts think about the business right now?
Broker Ratings on Adore Beauty’s Stock Price
Both UBS and Morgan Stanley rate their online beauty business as a purchase.
Interestingly, both companies have a price target of $ 6. If both brokers are correct, this is a potential increase of about 40% over the next year.
Both brokers are looking at the continued high levels of revenue growth and active customer growth that the company saw in the first quarter of 2010. Both brokers expect Adore Beauty to report double-digit sales growth for the entire 2022 fiscal year, despite the end of the blockade.
First Quarter 2010 Updates and Initiatives
In First 3 months Adore Beauty revenue for the new fiscal year was $ 63.8 million, up 25% from the previous year. Active customers increased by 24% to 874,000. Management noted that customer retention was high and customer repeaters increased 63% year-on-year.
The business is working on many strategic initiatives such as scaling mobile apps, building unique marketing channels and communities, while expanding its loyalty program.
In terms of connecting with the customer base, Adore Beauty’s Beauty IQ podcast has over 3 million downloads, a bite-sized beauty podcast has begun, and several sold-out virtual loyalty events have been held. Its first private label brand will be launched in the third quarter of 2010.
One of the things that may be affecting Adore Beauty’s stock price is the company’s outlook. According to management, the company operates within Australia’s $ 11.2 billion beauty and personal care category and has a large and growing addressable market. Online sales make up only 11.4% of the total market.
The market is growing at a compound annual growth rate (CAGR) of 3.8%, but online growth is growing much faster, with a CAGR of 26% from now to 2024. Adore Beauty has a 13% market share in the online market.
Adore Beauty says it has a loyal and very enthusiastic customer base. Each year, customers stay on the platform, become more valuable, and increase both order frequency and basket size.
The company also said it has benefited from structural tailwinds such as the accelerating shift to digital channels and the impact of new digital native millennials and Gen Z consumers entering the market. Those consumers continue to increase their purchases.
Globally, growth is accelerating in market segments with particularly strong ad-beauty, such as skin care, the largest category.
Adore Beauty Stock Price Valuation
The company Interest, taxes, depreciation and profit before depreciation (EBITDA) Margins remain between 2% and 4% in the short term, but will continue to reinvest and grow at a fast pace.
In the long run, the benefits of scale should lead to operating leverage and, according to management, provide an EBITDA margin.
Due to the high level of investment, brokers do not expect much profit in the next few fiscal years.
According to Morgan Stanley, Adore Beauty’s stock is valued at 86 times its estimated earnings in 2011.
Why analysts think Adore Beauty (ASX: ABY) shares are up 40%
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