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Farfetch’s (NYSE:FTCH) price target was cut to 80c at UBS earlier Thursday on current uncertainty and the possibility that a Richemont (OTCPK:CFRHF) deal won’t come to fruition.
UBS cut its price target to likely a stree-low 80c from $3.30, analyst Kunal Madhukar wrote in a note earlier Thursday.
“We stay on the sidelines on FTCH and reduce our PT to $0.80 from $3.30 to reflect the current uncertainty and the possibility that the proposed Richemont deal may not eventuate given Richemont’s announcement that it is evaluating all options,” Madhukar, who has a neutral rating on Farfetch, wrote.
Madhukar highlighted that it has been two weeks since FTCH said it would update investors in “due course” after delaying its Q3 results announcement. The delay in making an announcement likely means that if there is indeed a go-private deal, it would probably be based on current share prices rather than the share price of ~$1.70, prior to the results delay.
UBS’s Madhukar calculated that Farfetch (FTCH) has enough liquidity to meet its cash requirements for the next year.
The UBS price target cut comes even as Farfetch shares jumped 18% on Wednesday amid a report that the online luxury goods retailer was in talks to secure emergency funding from private equity firm Apollo Global (APO) as the online luxury goods site tries to shore up its finances.
The latest report comes after Farfetch (FTCH) shares have plunged 65% since Nov. 28 after the company said it won’t release its Q3 results and Richemont (OTCPK:CFRHF) said it has no plans to invest or loan money to the company after a report that Farfetch’s founder was looking to take the company private.
Richemont (OTCPK:CFRHF) said at the time that it’s “carefully” monitoring the situation, including reviewing its options in respect to arrangements with Farfetch (FTCH) in respect to YOOX Net-A-Porter.
Earlier this month, Farfetch (FTCH) took on two credit downgrades and was reported to be considering the sale of Browns as it looks to raise funds amid concerns about its business.
The Seeking Alpha Quant Rating on Farfetch (FTCH) has been at Strong Sell or Sell since late August, well before the share price collapse. Seeking Alpha analysts have also been warning investors to avoid the stock.
Short interest on Farfeth (FTCH) stands at about 13% of the total float as the wait for an financial update from the retailer goes on.
