Where might the boohoo share price go in the next 12 months? Here’s what the experts say

The boohoo share price has become one of the stock market’s biggest disappointments. But where do City analysts expect it to go next?

| More on:
Young black woman in a wheelchair working online from home

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has positions in Boohoo Group Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businesswoman calculating finances in an office
Investing Articles

Down 86%, could this FTSE growth stock blow up like the Rolls-Royce share price?

Paul Summers remains bowled over by the progress of the Rolls-Royce share price. Could a similar recovery play out in…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

NIO stock has soared over 80% since August! Time to buy?

NIO stock has had a phenomenal run of just a few short weeks. This writer sees room for further growth,…

Read more »

Investing Articles

3 simple moves to try and grow value in an ISA, without putting in more money

Christopher Ruane details a trio of moves he'd make to try and improve his Stocks and Shares ISA valuation without…

Read more »

Investing Articles

My best stock to buy for 2024’s smashing the market! Is there more to come?

It's a case of 'so far, so good' for our writer's pick for the best stock to buy for 2024.…

Read more »

Investing Articles

2 fantastic passive income stocks I’d feel confident going all in on

Diversification's considered crucial to safeguard a portfolio of stocks. But if I could choose only two, it would be these…

Read more »

Investing Articles

Best British growth stocks to consider buying in October

We asked our freelance writers to reveal the top growth stocks they’d buy in October, which included three 'Fire' recs!

Read more »

Investing Articles

What’s the dividend forecast for BT shares? Here’s what the experts say

Have I made a mistake in not buying BT shares for the dividend, even while watching the share price dip…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

These might just be the cheapest FTSE 100 shares for me to buy next

There are many ways we can consider which are the best UK shares to buy at any time. I'm seeing…

Read more »