HLFFF - HelloFresh is picked as a catalyst call buy idea by Deutsche Bank

Deutsche Bank issued a catalyst call buy idea on HelloFresh SE ( OTCPK:HLFFF ) ahead of the company's earnings report on March 7 and Capital Markets Day on March 23.

Analyst Nizla Naizer and team believe the Capital Market Day will see HelloFresh's ( OTCPK:HLFFF ) plans for growth and margin expansion laid out after an undeniably tough year in 2022.

"As a reminder, HelloFresh has a medium-term target to generate revenue of EUR10bn by 2025E with adj. EBITDA margins of over 10%. We currently model revenue of EUR10bn in 2025 but are a bit more conservative on margins with ~9.5% (Bloomberg consensus at 8.6%). The absolute EBITDA implied by our estimates corresponds to an extremely undemanding multiple of ~4x EV/EBITDA 2025E at current share price levels. "

Deutsche Bank thinks a clear outline of the path to reach those targets, coupled with an outlook for 2023, should act as catalysts for HelloFresh ( OTCPK:HLFFF ) stock, which has not to have rallied this year in line with other names in the European e-commerce sector.

In terms of valuation, HelloFresh ( OTCPK:HLFFF ) currently trades at 6.2X the 2023 EV/EBITDA estimate, which is seen as unjustified given the growth and margin expansion potential in the medium term. Deutsche Bank values the company at 12X the EV/EBITDA 2023 estimate and 7X the 2025 estimate.

See valuation metrics on HelloFresh.

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