Kogan.com’s trading update proved a mix bag, the company reporting in-line sales but lower EBITDA.
UBS says that while sales and gross profit are in line, the company will need to record a higher than usual seasonal uplift through November and December to meet first-half consensus estimates.Much hangs on whether the company can meet its $3bn gross sales target and UBS views this as unlikely.
Gross margins are trend upwards and inventory has normalised. Operating expenditure rose on marketing costs and UBS expects this will continue to drive a below-consensus performance.
Neutral rating and $10 target price retained.
Target price is $10.00.Current Price is $8.01. Difference: $1.99 – (brackets indicate current price is over target). If KGN meets the UBS target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).