Naked Wines is likely to revert to “pedestrian” growth once the pandemic subsides, Liberum said as the broker reduced its rating on the online wine merchant to ‘hold’.
In a trading update on Thursday, Naked Wines reported 68% annual sales growth fuelled by drinkers moving online during the crisis. Sales beat the top end of the company’s guidance for 55-65% growth.
Liberum said this was a “notable and understandable” slowdown from the 80% increase during the first half. Naked Wines will remain loss-making because of spending to acquire customers and high fixed costs, Liberum said.
The broker cut its rating from ‘buy’ and increased its price target for Naked Wine shares to 800p from 575p. Naked Wines shares fell 1.1% to 796p at 09:44 BST.
“There is a very wide range of outcomes for FY22 but we assume mean reversion of [key performance indicators] and pedestrian growth in a post-Covid world,” Liberum analyst Wayne Brown wrote in a note to clients. “Shares have been strong but noting the risks that may lie ahead with such elevated customer spend in a post-Covid world and being loss[-making] the valuation is fair.”
