On Monday, Deutsche Bank (ETR:DBKGn) updated its financial outlook on Zalando SE (ZAL:GR) (OTC: ZLNDY), increasing the price target to €36.00 from the previous €34.00. The firm has reiterated its Buy rating for the online fashion retailer's stock. This adjustment comes amid signs of a robust start to the Autumn/Winter season, which is expected to positively impact both sales and gross margin.
The bank's analyst highlighted Zalando as a top pick for 2024, noting an improvement in the European consumer climate and the company's successful navigation through the recent online/offline market shifts. Zalando's ability to achieve sales growth and margin expansion has been a key factor in this positive assessment.
The forecast for the company's full-year 2024 earnings before interest and taxes (EBIT) is now at the upper end of the guidance range, set between €380 million and €450 million, with Deutsche Bank's estimate at €450 million compared to a consensus of €433 million.
The updated forecast also includes an anticipated increase of 3.5% in full-year sales growth. This projection is based on the assumption that Zalando will ramp up its marketing investments in the fourth quarter, which is expected to support a 7.5% sales growth in the following fiscal year (FY25e), outpacing the consensus estimate of 6%.
Zalando's recent performance and the positive outlook for the future are reflected in the analyst's comments, which underscore the company's ability to deliver on its financial targets. The analyst also mentioned that the current trajectory suggests that Zalando is positioned to continue its growth trend, supported by strategic marketing efforts.
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