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Boohoo too cheap for ESG concerns, says JP Morgan

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Boohoo Group PLC’s (LON:BOO) current valuation does not fairly reflect the continued progress on ESG, solid top-line growth and strong operational grip, says JP Morgan.

Analysts noted that the AIM-listed retailer has implemented 20 of the 34 recommendations from the Levitt review and that it will update at the AGM on potentially linking executive pay to ESG targets.

READ: boohoo won’t be a ‘buy’ until ESG troubles are clear, says City broker

Barclays echoed these views, stating that these supply chain issues have been an overhang on the shares for almost a year now, but it is encouraging to see management dedicating more time and resources to addressing these topics, which should help rebuild confidence.

The bank said boohoo is well-placed to benefit from the reopening of its markets, with its test-and-repeat model and disruptive pricing.

There are still some unknowns around how the remainder of the year will look as the world opens up, which should act as a boost for the key ‘going out’ ranges.

On Wednesday, boohoo said it expects revenue to jump 25% in the year to February 2022 after a 41% climb to £1.7bn in the year to 28 February.

Shares dipped 2% to 314p on Thursday at noon.

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