Analyst Note| Jelena Sokolova, CFA |
We are maintaining our fair value estimate for narrow-moat Inditex as the company reported first-quarter (from Feb. 1 to April 30) results with a 56% lift in sales from 2020 levels at constant currencies. Sales in constant currencies were still 11.5% below the levels reached in 2019 as 24% of trading hours were unavailable through lockdowns and restrictions. Sales trends continued to improve in May, growing 5% against 2019 comparables from May 1 to June 6, despite a 10% reduction in trading hours. We are comfortable with our assumptions for Inditex revenue to outstrip 2019 levels by 2022. After rising by more than 20% from the start of the year, we believe shares are fairly valued, trading in 3-star territory.