Citi foresees Inditex shares gaining up to a further 20 percent

Friday, 30 October 2015

Citi analysts are optimistic about the future of Inditex as advance a growth potential for the titles of the textile giant of about 20 percent. Consequently, the US bank has revised up its price target on the value.

The investment bank explains that the growth of the Inditex multi-channel business has led to the development of 'click and collect' collection service that encourages the customer to choose Zara, the flagship of Inditex, over the likes of H&M and Primark. In this regard, Citi believes that the Swedish multinational does not offer this service because it lacks availability of personnel and due to other logistical difficulties.

So far this year, Inditex, which last July broke the barrier of 100,000 million euros worth of market capitalisation, gained 30.5 percent on the Stock Exchange, becoming the third company in the Ibex 35 in terms of value gain. But experts at Citi believe that there is scope for further market promotion.

Citi has also improved its price target on the shares of the company, placing it at 37 euros apiece, which is the highest rating of all brokerage houses following the stock (40 in total), just as highlighted by ´Cinco Días'.

According to this price estimate, the largest fashion retailer in the world has an upside potential of 19.7 percent over the current market price (circa 30.9 euros per share).

However, Citi´s view does not match that of the analysts surveyed by Bloomberg: 30 percent of the analysts who follow the value advised to buy; 55 percent, to maintain, and 15 percent opted for recommending to sell the stock.

As for the potential risks that Inditex would face in the coming months, Citi highlights the changing patterns of consumer spending and the successful launch of new formats.

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