Zalando: The worst now seems to be behind us (NEUTRAL vs. SELL, Fair Value EUR35 vs. EUR29
Zalando: (NEUTRAL vs. SELL, Fair Value EUR35 vs. EUR29 (-4%))The worst now seems to be behind us
Following Zalando’s sales and profit warning for Q3, we have reassessed our estimates and now expect a growth of 19.5% and an adj EBIT of EUR163m for 2018. With the huge wave of investments now taken into account by the market and given the recent decline of the share price, we now believe the main risks are priced-in and decide to upgrade our recommendation to Neutral. A cautious stance is still consistent in the very competitive online market where growth is becoming increasingly expensive. We have also amended our valuation method and now value Zalando through a combination of DCF and peers multiple (EV/Sales growth) which works out to EUR35.
Zalando is an e-commerce group based in Germany. Co. is engaged in the online retailing of clothing, shoes and accessories for women, men and children. Co.'s product offering include more than 1,500 brands, including global and local brands, as well as private labels, including shoes, clothing and accessores as well as sportswear and homeware designed especially for the Co. The Co.'s product offering is complimented by the Zalando Lounge and Zalon apps, which provides registered members special offers at discounted prices. Co. also provides a combination of services that include free delivery and returns.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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