Will Boohoo’s Stock Price Rise in 2022?

A pastel colored growing chart with a rising rocket.

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That boo-hoo (LSE: BOO) The stock price has plummeted 75% over the past 12 months.

As a shareholder who still thinks it’s a good investment, I did the only thing I could. I bought more. My second purchase got three times as many shares for the same money as the first time. But did I throw bad money behind good? Or are we on the verge of a stock price rebound?

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Well, the downward slide seems to have stopped, at least for the time being. But what makes me think boohoo stocks could rise again in the next 12 months?

First there is the rating. Based on the current stock price and earnings per share for 2020-21, we’re projecting a trailing P/E ratio of 10. That’s for a company that’s still in its early stages and has been growing its full-year earnings at a rapid rate.

And Boohoo stocks were trading at over 50 times earnings just a few years ago. I thought that was too high at the time. What often happens with an overheated growth stock is that a year from now it doesn’t beat expectations and stocks plummet.

Outlook for the year as a whole

The prospects for the year that just ended in February also make me optimistic. In the first nine months, boohoo saw its global net sales increase by 16%. This is below the growth of previous years. And it fits with the idea of ​​a Boohoo stock price crash after a slowdown.

But it’s still growth, not contraction. And the company just finalized its so-called “agenda for change,” aimed at addressing deficiencies in its supply chain and manufacturing partners.

The biggest increase in sales came in the UK, boohoo’s largest market, up 32%. Of boohoo’s overseas markets, the US is probably the most critical. And there, too, we recorded growth with a sales increase of 10%.

problems in the supply chain

But the drop in sales across Europe and the rest of the world points to the supply chain issues that have plagued the company. Part of this is due to global issues arising from the pandemic. But maybe boohoo really grew a bit too fast before it had adequate infrastructure.

Anyhow, to learn how that revenue growth will impact full-year earnings, we’ll have to wait until May 4 if the company is to report results. All we have to say for now is full-year sales growth expectations of 12-14%.

boohoo stock price risk

If I sound optimistic here, I’m also aware of the possible pitfalls. Today we are faced with inflation the likes of which we have not seen in decades. And people are sure to be more focused on staying warm and leaving the lights on in 2022 than looking at new outfits.

There’s also a risk that the international sales decline means the company has lost its early mover advantage. And that could put further pressure on Boohoo’s stock price, too.

But I’m optimistic for the long term, and I’m holding up.

https://www.fool.co.uk/2022/04/14/is-the-boohoo-share-price-set-to-soar-in-2022/ Will Boohoo’s Stock Price Rise in 2022?

Gary B. Graves

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