On Monday, RBC Capital Markets adjusted its outlook on Cettire Ltd (CTT:AU), an Australian luxury goods e-commerce company. The firm's analyst set a new stock price target of AUD1.50, a significant decrease from the previous AUD3.80, while maintaining a Sector Perform rating on the shares.
The revision follows Cettire's announcement of its fourth-quarter performance, which showcased a year-over-year growth of 53%. Still, the company anticipates that its earnings before interest, taxes, depreciation, and amortization (EBITDA) will drop to a range of negative AUD0.4 million to AUD2.6 million, a stark contrast from the approximate AUD7 million in the prior corresponding period (pcp).
The analyst from RBC Capital expressed concerns over the combination of a softening luxury market, which is currently experiencing increased discounting, and recent changes in Cettire's business practices.
These changes have been prompted by intensified scrutiny from investors and media. The analyst noted that the specific impact of these factors on the company's full-year 2024 results remains uncertain, which challenges the ability to have confidence in the stock or earnings outcomes.
Despite the impressive quarterly growth, the financial institution has pointed out that the negative operating leverage observed in the fourth quarter adds to the complexity of forecasting the company's performance. With these uncertainties in mind, RBC Capital has labeled the stock with a "Speculative Risk" designation, indicating the potential for higher volatility or risk in the investment.
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