Farfetch Surges After Results, Analyst Says Shares are Undervalued

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Farfetch Surges After Results, Analyst Says Shares are Undervalued
Credit: © Reuters.

By Senad Karaahmetovic

Shares of Farfetch Limited (NYSE: FTCH ) are up over 13% in pre-market Friday trading after the luxury fashion retailer delivered strong results.

Farfetch reported a Q2 loss per share of $0.21, but still much better than the analyst estimate of a negative $0.30 per share. Revenue for the quarter came in at $579.3 million versus the consensus estimate of $548.2 million.

Farfetch also updated its full-year forecast to now expect flat adjusted EBITDA margin, weaker than the prior forecast of 0-1%.

A Goldman Sachs analyst noted better-than-feared results and urged investors to see the Capital Markets Day as “a key catalyst” for FTCH shares.

“Farfetch will host a Capital Markets Day before the end of 2022 to discuss the 2023 outlook in more depth, including the potential impact of new partnerships (e.g. Neiman Marcus, Salvatore Ferragamo, Reebok),” the analyst explained in a note.

A Wells Fargo analyst also noted a “better-than-feared Q2 print.”

“The story has been hit, reset and now carries a 2023 setup that we like again. While the headline numbers appear somewhat uninspiring - when stripping away the macro (FX, Russia, China) the model continues to show strength,” the analyst wrote in a client note.

More importantly, the analyst sees FTCH shares as “a highly compelling laggard that investors need to refocus on. While current fundamentals remain under some pressure in the NT (2H numbers rebased today), we feel there is too much value to ignore at current levels,” he added.

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