Morgan Stanley Sees Compelling Upside In Luxury Fashion Retailer Farfetch

Morgan Stanley analyst Lauren Schenk reiterated an Overweight rating on the shares of Farfetch Ltd FTCH with a price target of $32.00.
The analyst thinks the complexity and many unknown aspects of Farfetch’s business and four newly announced deals have caused the stock to be mis-priced.
Schenk sees the investor day as a potential positive catalyst for the stock, given the sell-side and the market not appear to have spent much time digging into each deal.
The company needs to execute - both in its core business, its new Farfetch Platform Solutions (FPS) partnerships, and in communicating the size and impact of these deals to investors.
The analyst noted sell side estimates and the current share price do not reflect these deals.
The analyst expects luxury e-commerce penetration to increase from 12% in 2019 to 29% in 2025, implying an incremental $80 billion up for grabs as brands continue to move away from wholesale.
Schenk sees Farfetch as one of the few unprofitable tech businesses on the cusp of burgeoning profitability.
The company’s unique marketplace model checks each box the analyst sees as critical for success in fashion e-commerce - Limited/no inventory risk, especially fashion risk, operates in either luxury price points or low price points, Industries that are becoming more concentrated, like luxury eCommerce.
Related: Farfetch Shares Fly High As Its Q2 Earnings Firmly Holds The Ground
Price Action: FTCH shares are trading lower by 1.52% at $7.76 on the last check Monday.

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Morgan Stanley Sees Compelling Upside In Luxury Fashion Retailer Farfetch