ZLDSF - Zalando is a new catalyst call buy idea at Deutsche Bank

Deutsche Bank issed a catalyst call buy idea on Zalando SE ( OTCPK:ZLDSF ) on the expectation for a near-term bounce in share price for the German online retailer.

Analyst Adam Cochrane updated on Wednesday that the German Textilwirtschaft clothing data for November and the German online transactions data from Destatis have been more positive than the firm expected. Those data reads are anticipated to support the Zalando's Q4 sales and profit guidance.

"Zalando has guided to FY adj EBIT being at least €180m (DBe €186m) and this required a strong profit performance in 4Q with a return to LSD% sales growth in 4Q. There is a degree of investor scepticism as to whether the FY guidance could be met and was dependent upon a good November and December and we think these datapoints are supportive for these trends. In valuation terms Zalando is trading on 0.5x EV/sales which is a large discount to the historic range of 1-2x but we look at 2025 PE which is currently on c.21x and is below the longer run average of c.30-40x."

Looking ahead, Deutsche Bank thinks a better outlook on Zalando's ( OTCPK:ZLDSF ) sales and focus on margin expansion combined with less upward pressure on bond yields could lead to multiple expansion.

Read Zalando's earnings call transcript from the last report.

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