On Monday, CFRA analyst Nazmi Ghazali revised the 12-month price target for Zalando, a leading European online fashion platform, to €38.00 from the previous €40.00, while still recommending the stock as a Buy. The adjustment reflects a valuation based on a price-to-earnings (P/E) ratio of 33.1 times for the year 2025, which is lower than Zalando’s three-year average forward P/E of 41.1 times. Currently trading at a P/E of 32.69, InvestingPro analysis suggests the stock is undervalued despite its impressive 73.14% return over the past year. This valuation accounts for the macroeconomic uncertainties that could potentially impact consumer spending worldwide.
Despite the reduced price target, Ghazali has increased the earnings per share (EPS) estimate for Zalando in 2025 to €1.15, up from €1.00, and has also introduced a 2026 EPS forecast of €1.40. The analyst believes that Zalando is poised to benefit from the structural growth in European e-commerce and online fashion sectors. With a current net income of $260.13 million and a healthy revenue growth of 4.23%, the company’s financial performance supports these optimistic projections. The company’s strong brand recognition, broad customer base, and robust partnerships with global brands and retailers contribute to its advantageous position in the market. InvestingPro data reveals 8 additional key insights about Zalando’s financial health and growth potential.
Zalando’s strategic shift toward a more capital-efficient marketplace model is seen as a significant factor for its potential long-term growth. The company’s focus on cost efficiency and margin expansion is also highlighted as a critical element in its ability to improve profitability in the face of economic challenges.
Looking ahead, CFRA anticipates an acceleration in Zalando’s growth by the year 2025, as the company continues to invest in marketing initiatives and strives to enhance its competitive edge by offering improved services to its customers. The analyst’s outlook suggests confidence in Zalando’s strategic direction and its capacity to navigate through uncertain economic conditions.
In other recent news, Zalando SE (ETR:ZALG) has been the subject of differing analyst opinions. UBS upgraded Zalando’s rating from Neutral to Buy, significantly raising the price target from EUR28.00 to EUR40.00. This decision follows Zalando’s reported revenue outperformance and Gross Merchandise Volume (GMV) upgrades, suggesting a potential turnaround led by business-to-consumer (B2C) activities. UBS anticipates continued EBIT upgrades into 2025, driven by modest market share gains and improved retail gross margins.
Conversely, Bernstein maintained an Underperform rating on Zalando but increased the price target from EUR19.00 to EUR21.00. Bernstein analysts expressed skepticism about Zalando’s growth outlook and valuation, noting that the company’s mid-term GMV guidance might not meet expectations. They also cautioned about potential multi-year earnings downgrades and a de-rating. Despite these concerns, UBS’s analysis indicates further upside potential due to improving cash flow return on investment.
These recent developments highlight the varied perspectives on Zalando’s financial performance and future growth prospects.
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