In an acceleration of Adore Beauty's private label strategy, notes Morgan Stanley, the company will acquire premium Australian beauty and wellness brand iKOU for -$25m, funded from cash reserves.

The broker highlights potential for execution risk, given Adore's success has largely been in online retailing, as opposed to owning brands and store retailing.

Positives include management's expectation for FY24 revenue of $8.1m and EBITDA of $2.0m from iKOU, which implies 24.7% margins - compared to the broker's 2.5% forecast for FY25.

Equal-weight. Target $1.32. Industry view: In-Line.

Sector: No Sector.

Target price is $1.32.Current Price is $0.89. Difference: $0.44 - (brackets indicate current price is over target). If ABY meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2024 Acquisdata Pty Ltd., source FN Arena