BUY – also buy Asos (ASC LN)
YOOX IM: Eur 17.30; ASC LN: 23.87
August 6, 2014
We recommend building-up an investment position in Yoox. Yoox is a leading online fashion/lifestyle store. The company was founded in 2000 and has been growing furiously with sales expected to reach over $1bn next year. The company has long-standing relationships with designers, manufacturers, and official retailers worldwide.
The stock is listed in Milan, and it was IPOed in Dec 2009 at Eur 4.30. The shares rose to almost Eur 35 at the end of 2013, and have been correcting since then to the current Eur 17 level. We believe that at the current share price the stock is starting to look undervalued at 11.5x 2016 ebitda given its growth potential and even its takeover attractiveness to an Amazon, or a major fashion retailer that could gain a high quality on-line presence immediately. We note that Yoox runs Kering’s online business for most of its brands. Richemont is also the owner of Net-a-Porter, a competitor to Yoox. As luxury fashion starts moving increasingly on-line, Yoox is particularly well placed to become a strategic investment. The current correction represents an opportunity to enter the investment at favorable long-term valuations.
http://www.yooxgroup.com/en/investor_relation/press_releases/presentations_2014.asp
Both Yoox and Asos are attractive and we recommend both as BUYS, with a preference for Yoox because of its luxury positioning. We also withdraw our SELL on Amazon and move to a HOLD rating. The stock is down almost 25% year to date just when profitability is (finally?) about to explode (from 2015 onward).
FULL REPORT ATTACHED
Relative value: YOOX Spa (yoox im)