Nelly’s Q1 report fell short of our expectations. Sales fell 2% y/y while EBIT, due to higher admin cost and marketing spend, fell 60% y/y despite a 3.7pp increase in gross margin. While these investments may help support higher growth longer term, the short-term outlook remains uncertain and the higher cost base may continue to weigh on EBIT growth in the coming quarters. We lower estimates and update our fair value range to SEK 71-87 (91-110).
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