Bank Of America Initiates Coverage On Cnova Despite Limited Investor Exposure

Justin Post of Bank of America initiated coverage of

on Tuesday with a Buy rating and $11 price target. “We are constructive on Cnova, a multi-brand eCommerce company with a strong presence in France, Brazil, and several emerging markets,” Post wrote. The analyst adds that the company has a growing market share along with accelerating metrics and revenue growth in addition to a third-party marketplace that holds the potential to further drive gross merchandise volume and gross margin expansion. Post states that Cnova has seen “limited” investor exposure despite it being one of the largest e-commerce companies in the world that demonstrated 20 percent revenue growth in 2014. The analyst adds that the company's popularity has resulted in a high organic traffic mix, strong customer repeat purchasing behavior and price leadership positions. Post also notes that the company's relationship with its parent company, Casino Group, provides a competitive advantage in purchasing and click and collect fulfillment relative to its peers operating in France and Brazil. Bottom line, Post believes that Cnova is “well positioned” to capitalize on the growth of global e-commerce with the potential for 15 billion euros in long-term revenue versus a 3.5 billion euro estimated revenue base for 2014.