AO World (LON:AO.) – why are the shares falling away?

Mark Watson-Mitchell
Aug 11
2 min read

11.08.2025

A number of regular readers have asked why are the shares falling away of late?

Nervousness perhaps is the answer.

Another reason could be that analyst Alison Lygo, at Deutsche Bank, has downgraded the ‘white goods retailer’ on the back of normalising its earnings growth.

She switched her recommendation from Buy to Hold and reduced her Target Price from 135p to 105p on the group.

Lygo considered that AO’s USP of efficient two-man delivery with high customer service doesn’t translate into a competitive advantage here in the UK.

Especially when competing against Amazon’s cost-convenient Prime proposition or the ‘click & collect’ convenience of omnichannel peers.

However, analyst John Stevenson, at Peel Hunt, reckons that AO has the potential to double its share of the electricals market, which could well increase profits five-fold over the next decade.

With a Target Price of 137p, Stevenson states that:

“Get membership right and we believe AO can double its electrical market share, delivering 2.5 times current revenue and five-time profit over 10 years, with sliding scale in between.

AO already generates revenue of £1.2bn and a 4% – and rising – profit before tax margin.

This feeds an attractive and growing level of free cashflow generation.”

At Jefferies, its analyst Andrew Wade has a 150p Target Price on the shares.

Commenting upon the recent record profits he considered that:

“We think this is a clear demonstration of the momentum that AO has now built, and we continue to view the business as an outstanding customer-facing operation that, with a firmly profitable base now re-established, has the opportunity to leverage its scale and customer relationships to deliver premium growth for the foreseeable future.”

However, my opinion remains that the shares of AO are very appealing, especially at the current 88.50p.

There should be a pre-AGM Trading Update being issued in the middle of next month.