By Sam Boughedda
Shares of Farfetch Limited (NYSE:FTCH) were downgraded to Market Perform from Outperform by a Cowen analyst on Tuesday, also lowering the price target to $9 per share from $11.
He said that while they appreciate Farfetch's long-term growth prospects as a capital-light marketplace, brand owner, retailer, and software solutions provider, a lack of upside to estimates is likely as the company works on "profitability, customer retention/acquisition, navigates a promotional environment, & faces near-term Russia/China risks."
"We do remain excited that FTCH is building the 'amazon of luxury' as a powerful long-term platform of global luxury. However, despite a modest valuation, we monitor plenty of risk factors, which could keep stock at bay," wrote the analyst.
He also expressed "long-term concerns" about the company's ability to gather the top and newest supply due to "increased digital competition, brands making direct to consumer strides, stronger curation and creative partnerships at competitors, and luxury industry brand concentration."
However, on the flip side, they "believe embracing beauty, New Guards Group, and Farfetch Beats are positive approaches to drive differentiation and loyalty."
Farfetch shares are up 0.61% Tuesday.