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On Monday, Morgan Stanley (NYSE:MS) analysts raised the price target for LuxExperience (NYSE: LUXE) stock to $10 from a previous target of $4, with the stock currently trading at $9.35. The analysts maintained their Equalweight rating on the stock. According to InvestingPro data, LUXE shares have surged 74% over the past year, trading between $3.22 and $12.50. This adjustment follows the closing of LuxExperience’s acquisition of YNAP and a recent strategic update by the company.
The analysts noted that their prior forecasts did not account for the YNAP acquisition, leading to significant changes in their projections. The new forecasts incorporate the acquisition and reflect LuxExperience’s new operating segments: Luxury/Mytheresa, Luxury/Net-A-Porter & Mr. Porter, and OffPrice. These segments were outlined in the company’s strategic update on May 15th.
Morgan Stanley’s updated valuation is based on a blended average of discounted cash flow (DCF) and EV/EBITDA multiple valuations. The DCF valuation uses a weighted average cost of capital (WACC) of 10.5% and a terminal growth rate of 3%, while the EV/EBITDA approach values the stock at 8x EV/EBITDA, aligning with e-commerce peers. InvestingPro analysis indicates the stock is currently trading at a notably high EV/EBITDA of 103.94x, suggesting potential overvaluation.
The analysts also adjusted their bull and bear case scenarios, with the bull case moving to $15 from $5, and the bear case moving to $5 from $2.50. They emphasized the importance of LuxExperience’s management executing the integration of YNAP effectively, as it is still in its early stages.
LuxExperience attended Morgan Stanley’s conference last week, where management provided a strategic rationale for the YNAP acquisition and outlined plans for business turnarounds. The analysts will continue to monitor management’s execution closely to reassess their stance on the shares in the future. InvestingPro assigns LUXE a FAIR Financial Health Score of 2.01, with particularly strong momentum metrics. Subscribers can access 12 additional ProTips and detailed financial analysis to better evaluate the company’s turnaround potential.
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