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AO.: Rising Margins And Buybacks Are Expected To Drive Stronger Returns

Recycling Initiatives And Vertical Integration Will Drive Future Profitability

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AO.
AnalystConsensusTarget
Not Invested
Published 25 Jan 2025

Update shared on 04 Dec 2025

Fair value Increased 11%
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AnalystConsensusTarget's Fair Value
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1Y
1.3%
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-0.7%

Analysts have raised their price target on AO World from approximately £1.30 to £1.43 per share. This reflects expectations for structurally higher profit margins that more than offset slightly slower projected revenue growth and a modestly higher discount rate.

What's in the News

  • AO World upgraded full year fiscal 2025 earnings guidance, now expecting profit before tax around the top end of the recently narrowed GBP 45 million to GBP 50 million range (Corporate Guidance: Raised).
  • The company announced new sales guidance for 1 April 2025 to 30 September 2025, forecasting group revenue to rise about 13% year on year (Corporate Guidance: New/Confirmed).
  • AO World commenced a share buyback program authorized to repurchase up to 58,030,347 shares, or 10% of issued share capital, with up to $10 million of shares to be bought back and cancelled by June 30, 2026 (Buyback Transaction Announcements).

Valuation Changes

  • The fair value estimate has risen moderately, increasing from approximately £1.30 to £1.43 per share.
  • The discount rate has edged higher, moving from about 8.68% to 8.85%, which implies a slightly higher required return.
  • The revenue growth assumption has been reduced modestly, from roughly 8.67% to 7.69% per year.
  • The net profit margin assumption has increased meaningfully, rising from about 3.17% to 4.09%.
  • The future P/E multiple has declined slightly, moving from around 19.2x earnings to 18.3x earnings.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.