Analysts said the bootmaker “embodies everything we look for in a brand” with an “authentic rebelliousness” and an iconic product known across age groups and beyond fashion trends.
The firm, which debuted the market with an eight times oversubscribed IPO valuing it at GBP3.7bn, has a full price sales mix of over 90% with a loyal customer base that tends to stay with the brand.
Over 80% of own-website traffic comes direct or from organic search, while engagement rates through social media are “impressive”, the broker noted.
With 60% gross margins and 27% underlying earnings (EBITDA) margins, Peel Hunt expects future free cash flow generation to be paid out through ordinary and special dividends.
Analysts stressed that it’s a stock to own though the premium “is high enough”, hence the ‘hold’ recommendation.
“With attractive margin structures, a strong brand and impressive levels of cash generation, this is a company we’d like to own,” they commented.
“No doubt there’s some forecast upside, but we don’t expect this to be on the scale of the other recent IPO, Moonpig, meaning we can’t see any obvious positive catalyst to depart materially from company guidance at this stage.”
“Put another way, at the bottom end of the intended IPO range at 370p/GBP3.7bn we would be a strong buyer. However, sat 30% higher at 500p, we’re in HOLD territory. We see much to like and many reasons to be a buyer on weakness.”
Shares dipped 1% to 506.76p on Wednesday before lunch.