Economic headwinds, in the form of rising inflation, rising interest rates, a possible collapse in the housing market, and an increasing probability of a recession have taken their toll on consumer sentiment, which in turn is taking its toll on the retail sector. Ecommerce firms, which benefited from the corona crisis of 2020, are feeling the pressure too. It seems, for now, that no one is safe.
But really? In an analysis from Stifel, analyst Scott Devitt sees a path forward for online retailers. While he acknowledges that the road is rocky, he also points out several reasons why ‘etailers’ may show gains in the second half of this year. Devitt writes, “We note that 2Q is the last quarter of difficult prior year compares, comping against stimulus checks that consumers largely received in March/April of 2021, and comps should ease as the year progresses. Once conditions begin to show stability/signs of improvement, we believe many eCommerce stocks will be proven to have been undervalued during the downdraft.”
If Devitt is correct in his breakdown of the online retail market, then current prices should mark a bottom – at least a temporary one. We may be seeing some evidence of that in the analyst reviews, as the Street’s professional stock watchers have picked out several ecommerce stocks with high upside potential, in cases to double or more on the 12-month horizon. Using the TipRanks database, we’ve pulled up the details on three of these; here they are, along with recent analyst commentary.
Farfetch, Ltd. (FTCH)
First on our list today is Farfetch, the online luxury fashion goods retailer. The company’s ecommerce platform operates to connect ‘creators, curators, and consumers’ of luxury fashion items, from jewelry to high-end shoes to accessories to clothing for men and women. Farfetch has its home base in Portugal, and operates out of offices in major global centers: London, New York, LA, Tokyo, Shanghai.
Farfetch’s shares are down 75% so far in 2022, with most of that loss coming earlier in the year. The company’s Q1 financial report was a…
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