When I look at how far the boohoo (LSE: BOO) share price has crashed in the past few years, I tend to forget I’m a victim of the fall. Maybe it’s some sort of mental protection mechanism.
Brokers’ price targets vary depending on who we ask. But the average target for the next 12 months now looks to be about 36p.
The shares are trading at just 29.4p at the time of writing, so that would be a 22% increase. Maybe there’s hope for us yet.
What do we need?
I’ve seen false hopes before though. And despite the average price outlook being positive, the Buy/Sell consensus is leaning to the Sell side. Maybe that’s not surprising, as the weakest price target I can see is just 18p, for a 39% loss.
Still, the most bullish is up around 70p, well over twice the current price. So I’m certainly not going to take these forecasts at face value. Instead, I prefer to think about what it might take for the bulls to turn out right.
I see one key thing here, which might be glaringly obvious. It’s profit, and we really could do with some.
Forecasts
The problem is, we’re looking at negative earnings per share (EPS) as far as the eye can see. Or out to 2027, at least.
On the bright side though, forecasts see net sales rising 12.5% between 2024 and 2027. And EBITDA would be positive if they’re right, rising 60% by 2027.
The loss per share on the cards for 2027’s actually only a very small one. It really wouldn’t take much to get it past the breakeven point. And that’s one thing I really do think could give the share price a boost — a positive EPS forecast.
Longer term
But another thing does concern me. That bit about the long-term future for boohoo. This forecast drive towards profitability seems to be based on lower costs and improving margins.
Those are fine, and definitely part of the picture. But for long-term sustainability, we need to see better sales growth.
Still, these are early days for the company’s turnaround plans. And in FY 2024 results, posted in May, we heard of a couple of key potential milestones. If they come good, I could see a fair chance of a share price uplift. But if they don’t, it could mean pain.
Cash flow
The company reckons it should see “significant capital expenditure reduction” in FY 2025, and “expects to generate positive free cash flow“. I reckon the cash flow could mark a key turnaround point, if it comes off.
So where will the boohoo share price really go in the next 12 months? It’s rare that I see such a wide range of price targets. And that, to me, shouts of risk.
I really just think that 12 months is nowhere near long enough to get a feel for the future for boohoo. Maybe interim results, hopefully due soon but currently ‘TBC’ on the company’s calendar, can help pin things down a bit better.
