Report
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We change our recommendation from BUY to SELL after cutting our EBIT estimates by -31% on average in 2020/2021 due to the impact from COVID-19 in our scenario of V-shaped recovery and with limited upside in a U-shaped recovery. Our new T.P. is € 25.77/sh. (-21% vs. previously, +12% upside). As online sales increase, the market’s attention focuses on margin sustainability in the long-term. Today we release a report where we analyse the implications of greater penetration of the online channel, with all indications pointing to lower margins (depending on the extent of the cannibalisation on physical stores), but with robust sales growth and lower capex needs, which could be partially offset. The stock is trading at P/E’20e and ‘21e of 28x and 21x, respectively.
INDITEX: COVID-19 AND MARGIN PROSPECTS LOWER ITS UPSIDE (ANÃLISIS BANCO SABADELL)
We change our recommendation from BUY to SELL after cutting our estimates due to COVID-19.We change our recommendation from BUY to SELL after cutting our EBIT estimates by -31% on average in 2020/2021 due to the impact from COVID-19 in our scenario of V-shaped recovery and with limited upside in a U-shaped recovery. Our new T.P. is € 25.77/sh. (-21% vs. previously, +12% upside). As online sales increase, the market’s attention focuses on margin sustainability in the long-term. Today we release a report where we analyse the implications of greater penetration of the online channel, with all indications pointing to lower margins (depending on the extent of the cannibalisation on physical stores), but with robust sales growth and lower capex needs, which could be partially offset. The stock is trading at P/E’20e and ‘21e of 28x and 21x, respectively.
Underlying
Inditex (ITX SM)
Provider
Sabadell
Ignacio Romero
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