Boohoo Share Price is Trading at a 78% Discount – Analysts

Summary:
• Analysts believe that the Boohoo share price is trading at a 78% discount. We explain what to expect now that the stock is recovering.

The Boohoo share price is in deep bear territory as investors reflect on the company’s growth and cost challenges. The stock is trading at 202p, which is about 45 per cent below its highest level this year. It is hovering near the lowest level since April last year.

Analysts believe a rebound is likely

As I have written before, there are three main concerns about Boohoo. First, there are questions about how the rising costs of doing business in the UK will impact its business. Wages have risen as the UK recovers. Also, the firm’s commitment to improving its working conditions will lead to margin compression.

Second, as the global economy reopens, there are concerns about whether the company will see more growth. Finally, the Boohoo share price has fallen because of the rising cotton prices.

Still, analysts are relatively optimistic about the stock. Data compiled by Yahoo Finance shows that the average target by analysts is 359p. This is about 78% upside from the current level. Some of the most bullish analysts are Deutsche Bank and Shore Capital. Indeed, Shore analysts believe that the shares will surge to 475p. 

Another DCF valuation by Simply Wall St shows that the Boohoo share price is trading at a 47% discount. 

Boohoo share price forecast

Turning to the four-hour chart, we see that the Boohoo share price has found a strong support recently. The stock has struggled moving below the key support level at 177p. It has also formed a relatively small double-bottom pattern. But it is also slightly below the short and longer-term moving averages.

Therefore, the BOO stock will likely bounce back in the near term. This view will be validated if the stock moves above the key resistance level at 215p, which was the lowest level in October.