Cettire shares drop as Citi initiates coverage with 'sell' rating
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More news: Cettire shares fell 5.72% to $1.40 in early trading as Citi initiated coverage on the company with a ‘sell’ rating.
Citi analysts said its rating was due to increased competition for the online retailer and the end of the luxury boom.
Citi initiates Cettire with ‘sell’ rating
The news: Citi analysts have initiated coverage of Cettire with a ‘sell/higher risk’ rating due to increased competition for the online retailer and the end of the luxury boom.
The numbers: Citi has a $1.30 target price on the stock, which last closed at $1.49.
The analysts also said Cettire's FY25/26 EBITDA estimate sat 15% to 8% below Visible Alpha's consensus.
The context: Citi said Cettire now has a new competitor called Poizon based in China and noted there was a risk of potential turnaround of other competitors Farfetch and YNAP. They said Cettire needed to “tread water that much harder to maintain its admittedly very successful price leadership strategy with negative implications for margins”.
The analysts also said major luxury groups were doubling down on tightening distribution channels and that tailwinds of Chinese demand and post-pandemic boom had been replaced with “anaemic global demand, multi-year inventory build-up within the industry, and price architecture misaligned with customers budgets”.
What they said: “Short-term competitive pressures for Cettire and personal luxury industry weigh heavily on outlook for the company. Long-term supply-chain risks, weigh on valuation. We think consensus is optimistic on Cettire margins,” Citi said.
The source: Citi research
