Farfetch's Equity Value Has Limited Upside Over Next Twelve Months, Analyst Says

JMP Securities initiated coverage on Farfetch Ltd FTCH with a Market Perform rating.
Farfetch Limited is a dominant platform within personal luxury retail, and the analyst expects it to strengthen this position through its robust solutions offering.
However, near term, challenged upper funnel trends and relatively low consumer savings rates may hinder growth somewhat.
The analyst thinks the contribution from FTCH's recently announced partnerships and its pending minority-stake acquisition of YOOX NET-A-PORTER is currently reflected in FTCH's multiple.
Therefore, the analyst sees limited upside to FTCH's equity value over the next twelve months.
The analyst estimates personal luxury retail within FTCH's serviceable obtainable market was $53 billion in 2022, where FTCH captured 7.7% market share.
By 2025, the analyst expects Farfetch's share to grow to 13.7% of a $76 billion market share, largely through previously announced partnerships.
Though the size of FTCH's opportunity is large, the long-term secular growth is coming from China, said the analyst.
Given the track record of non-Chinese companies success in the country, the analyst sees risk to FTCH's ability to scale the country to similar penetration rates as the U.S., added the analyst.
The analyst sees active buyer growth as a key factor in FTCH's ability to capture the larger opportunity ahead, particularly since there has not been meaningful growth in TTM GMV/Active Buyers.
Price Action: FTCH shares are trading lower by 6.75% at $4.36 on the last check Friday.

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Farfetch's Equity Value Has Limited Upside Over Next Twelve Months, Analyst Says