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When I look to what extent boohoo (LSE:BOO) share price has plummeted in recent years, I tend to forget that I am a victim of the fall. Maybe it's some kind of mental protection mechanism.
Broker price targets vary depending on who we ask. But the average target for the next 12 months now appears to be around 36p.
The shares are trading at just 29.4p at the time of writing, so that would be an increase of 22%. Maybe there is still hope for us.
What do we need?
I've seen false hope before though. And even though the average price outlook is positive, the Buy/Sell consensus leans towards the Sell side. This is perhaps not surprising as the weakest price target I can see is just 18p, representing a 39% loss.
Still, the most bullish is up around 70p, well over double 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 do well.
I see one key thing here, which might be glaringly obvious. It's a win, and we could really use some.
Forecasts
The problem is that we're seeing negative earnings per share (EPS) as far as the eye can see. Or at least until 2027.
However, the positive side is that forecasts call for net sales to increase by 12.5% between 2024 and 2027. And EBITDA would be positive if they are correct, increasing by 60% by 2027.
The loss per share forecast for 2027 is actually very small. It really wouldn't take much to break even. And that's something I really think could give the share price a boost: a positive EPS forecast.
Longer term
But there is something else that worries me. That's about Boohoo's long-term future. This expected push towards profitability appears to be based on lower costs and improved 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 the early days of the company's turnaround plans. And in its fiscal 2024 results, released in May, we heard about a couple of key potential milestones. If they go well, you could see a good chance for the share price to rise. But if they don't, it could mean pain.
Cash flow
The company believes that it should see “significant reduction in capital expenditure”in fiscal year 2025, and “expects to generate positive free cash flow“. I think cash flow could mark a key turning point, if it comes to fruition.
So where will the Boohoo share price really go over the next 12 months? It's rare that you see such a wide range of price targets. And that, for me, screams of risk.
I really think 12 months is not enough time to get an idea of Boohoo's future. Perhaps the interim results, which will hopefully be released soon but are currently 'TBD' on the company's calendar, can help pin things down a little better.