Farfetch shares slump 17.3% in Thursday trading

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Farfetch is ‘underappreciated’ say Wells Fargo analysts who add company to ‘Top Pick’ list

Farfetch Ltd. is “underappreciated,” according to Wells Fargo analysts, who have added the luxury e-commerce business to its “Top Pick” list. Farfetch began publicly trading eight months ago, and has since acquired sneaker company Stadium Goods, which analysts think could reach $700 million in gross merchandise volume (GMV). Shares have climbed nearly 45% for the year to date, outpacing the Amplify Online Retail ETF , which is up 26.3%, and the S&P 500 index , up 15.2% for the period. “In particular, we believe the company’s post-IPO developments have flown under the radar but present significant long-term growth opportunities,” analysts wrote. Among the company’s positive attributes: it’s underpenetrated in China, a $200 million piece of the business that could grow to a $6 billion market by fiscal 2025 in the next five-to-10 years; and growth potential with the Black & White business, which provides luxury brands with a platform to engage with customers. Analysts think that business could reach $1.6 billion by fiscal year 2025 from $35 million today. “[G]iven the addition of Stadium Goods this year and Toplife/Harrod’s in FY20E, there is significant visibility into Farfetch’s growth profile over the next 12-to-24 months,” Wells Fargo said. Wells Fargo rates Farfetch stock outperform and raised its price target to $32 from $30.

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