SRH AlsterResearch AG Initiation: HelloFresh SE - Overeaten, Initiate with Sell

Hellofresh SE
Retail

Market Cap EUR 10.2bn

SELL, PT EUR 53.00 (downside 12%)
Hellofresh_Initiation

HelloFresh reported solid 2020 results, with the top line meeting updated guidance, while the AEBITDA margin (adjusted for special items, e.g., share-based compensation expenses, legal and M&A costs) coming in at the upper end of it. The company successfully delivered over 600m meals across 14 geographies, demonstrating richer value propositions for its products. The group has reiterated its target of revenue growth at 20%-25% on a constant currency basis and an AEBITDA margin at 9%-12% in 2021, which seems achievable in our view. We modelled top-line and bottom-line growth at the mid-point of guidance and even above the upper end of the guided range in the mid-term (2023E). Having said that, the stock seems to be overvalued after a strong run in 2020, fuelled by pandemic impacts. Hence, we initiate coverage with a price target of EUR 53.00 and a SELL recommendation.

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