UBS Ups Inditex to Buy Rating, PT €35

New strategy for textile giant company Inditex into e-commerce and expansion in multi-channel is a clear positive according to UBS. Per today’s note:

« We believe that the recent investment in RFID (Radio Frequency Identification Technology) sets ITX up well for further multi-channel revenue growth, and at a lower cost to serve.

We maintain sales estimates but now assume 30-40bps EBIT margin leverage over the next few years (from flat). Estimates increase accordingly, and with capex continuing to rise below the rate of sales growth, cash will also increase faster.

We raise dividend estimates but upside risk still remains here. Our PT is based on DCF and rises to reflect estimate upgrades and long term margin upside. »

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