Course objectives by Zalando-Del (WKN: ZAL111)? At the moment, it looks more like some analysts were rolling the dice. Don’t get me wrong: But bandwidth is really very, very differentiated. Here’s a little insight.
Alone since the beginning of May, an analyst has e.g. announced a price target of 87 EUR for the fashion e-commerce player, which would mean an increase of over 200%. The biggest critic, on the other hand, sees 18 euros as a realistic value. The target price is June 24 this year.
If we look at the Zalando share and these two price targets, we can say: A lot has happened. After all, there is now a recognition that growth in 2022 will tend to give way to stagnation. But even in recent days, there have been targets between 25 and 55 euros. Is that ridiculous? Maybe. But it requires first and foremost one thing: context.
Which makes price targets (for the Zalando stock) difficult
We Fools are not fans of price targets. This is not only the case with the Zalando stock and its wide range. No, but applies in general. This extreme premise shows why it would be negligent to place great emphasis on these short-term guidelines, which always change when there are new, short-term findings.
But there are clear differences in the value of the argument. This means you can use price targets for your own research if the analyst has dug deep. For example, some point to a strong competitive position in fashion e-commerce and in Europe. And are more optimistic in the long run. Others say on the other hand: growth is poor, the business model is not in demand at the moment. Fie, fie. You can see it like this. Depending on how your own approach is viewed.
At least one thing is certain about the Zalando stock: it is difficult at the moment. The stagnation and the weak mood can lead to further downside. But what does the fool do? I’m more likely to ask myself the question: Is it likely that the fashion e – commerce megatrend is losing momentum? Or will the consumer still focus in the online direction in the future? The latter is the more likely option for me. As well as a return to growth for Europe’s biggest fashion e-commerce player. Incidentally, I can not express that in a price target. But with a price-to-sale ratio of only 0.6, I am bullish.
Metrics are also misleading
Price targets in general and for the Zalando share can sometimes depend on key figures. Looking at this e-commerce stock now, we are looking at a cheap price-to-sell multiple of 0.6. But also a price-earnings of around 27. The prize question: What should you preferably build on? If we argue with P / E, we can say: A further sale would be possible, precisely because the group is not so profitable.
But here, too, there may be prospects for more profitability in the future. Nevertheless, we see that course objectives always need coherence and further, personal considerations. The fall of this admittedly declining stock at the moment shows it very, very clearly.
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Vincent owns shares in Zalando. The Motley Fool owns and recommends Zalando shares.