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. »

Goldman Sachs Initiates Ceconomy at Neutral

« We initiate [Ceconomy] at Neutral, with an €11.6 price target (c.2% upside). We 
believe: 1) a low-growth consumer electronic retail category channel shift to online sales will offer some growth, but store LFL could stay negative
 (or flat); 2) underlying cost inflation (especially in stores) could offset the
 benefits from self-help initiatives (including Services & Solutions
 penetration, loyalty program etc.); 3) our pricing survey shows 2-5% price
 differential with Amazon in Germany, which we believe needs to fall; 4) a
 c.5% EBITDA margin (assuming no exit from loss-making countries) looks optimistic, but we expect EBIT margin/FCF to improve in FY18. »