On Friday, Deutsche Bank (ETR:DBKGn) analysts adjusted their outlook on Zalando SE (ETR:ZALG) (ZAL:GR) (OTC: ZLNDY), a leading European fashion e-commerce company, by lowering the price target from EUR40.00 to EUR38.00. Despite the reduction, the firm maintained a Buy rating on the stock.
The analysts believe Zalando is strengthening its position as a dominant player in the European fashion e-commerce market. They anticipate the year 2025 to be a time of relative consolidation following two years of margin recovery in 2023 and 2024. The analysts project mid-single-digit percentage (MSD%) sales growth for Zalando but see limited potential for margin expansion. This could lead to waning investor interest, according to Deutsche Bank’s analysis.
However, Deutsche Bank also noted some positive developments for Zalando. An ongoing acquisition is expected to accelerate earnings growth through synergies over the coming years. Although the benefits of this acquisition may not be fully reflected in the 2025 EBIT upon consolidation, the analysts see it as a long-term positive.
The guidance provided by Zalando for the current year was slightly below the consensus expectations. Nevertheless, it encompassed the majority of forecasted scenarios. Historically, Zalando has a track record of surpassing its initial guidance, with 2022 being the only significant deviation from this trend.
Deutsche Bank’s commentary underscores the potential for Zalando to continue its growth trajectory, despite the current forecast suggesting a period of consolidation and the challenges that may pose for investor engagement.
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