NuWays AG Issues a "Hold" Rating on elumeo SE with Decreased Price Target

NuWays AG recently released a research update on elumeo SE, categorizing the company's stock with a "Hold" recommendation and revising the target price from €5.00 to €2.70. This adjustment reflects a cautious outlook based on elumeo's mixed Q4'23 performances and weaker-than-expected FY24 guidance.

The report highlighted elumeo's stagnant year-over-year sales at €45.4 million, compounded by a significant decrease in average sales price to €73, which is a 10% decline from the previous year. This was partly due to customers' reluctance to purchase high-value items. However, the number of items sold rose by 10% year-over-year, illustrating a mixed sales dynamic.

Additionally, elumeo's EBIT fell sharply to -€2.9 million, attributed to increased investments in TV web sales channels and a decline in gross profit margins due to inflationary pressures. The company's management aims to address margin weaknesses by implementing a stricter return policy and optimizing AI in customer support to boost efficiency.

The sluggish growth of elumeo's video-shopping platform 'jooli' was also noted, indicating limited upcoming revenue contributions. Long-term projections suggest moderate sales growth driven by improvements in webshop performance and advances in technology, including AI-enhanced shopping experiences. However, concerns about sustainable profitability due to ongoing economic pressures and necessary marketing investments persist.