AO World – up 27% in two weeks, shares now 106p offer significant upside, analyst’s Fair Value 160p

Mark Watson-Mitchell – 01.10.2025

Just two weeks ago, I stressed that the shares of AO World (LON:AO.), at 83.40p, looked too cheap!

That was upon the group issuing a positive Trading Update ahead of its AGM.

The company’s shares had been hanging around the 85p level for some time, looking relatively friendless, especially considering its market capitalisation of well over £500m.

I clearly stated that despite the group’s shares having recently falling away, I remained totally convinced that it is pushing ahead as strongly as it can, while going against difficult retail trading generally.

I am glad to say that since that note the group’s shares have risen to 106p, showing a 27% gain in just two weeks.

Is there more to go for?

The Business

The group offers major and small domestic appliances and a growing range of mobile phones, AV, consumer electricals and laptops.

It also provides ancillary services such as the installation of new and the collection of old products, while also offering product protection plans and customer finance.

Management Comment 

Ahead of the AGM, AO's Founder and CEO John Roberts stated that:

"I'm delighted that we are on track to deliver yet another period of double-digit revenue growth and a strong profit performance, whilst maintaining our globally leading customer service standards.

Our strategy as set out at our full year results is working and we have an exciting pipeline of further value to deliver for customers in H2.”

Analyst’s Views

Caroline Gulliver and Hannah Crowe, at Equity Development, are very positive about the group and its potential, having recently raised their Fair Value assumption to 160p (150p) a share.

For the year to end-March 2026 they look for group revenues to rise to £1,284.5m (£1,137.6m) with adjusted pre-tax profits of £47.5m (£43.5m), lifting its earnings to 5.8p (5.3p) per share.

For 2027, they see £1,408.2 sales, then £61.5m profits, worth 7.6p per share in earnings.

The year to end-March 2028, the analysts estimate, could show £1,561.0m turnover, £76.6m profits, with earnings generated to 9.5p per share.

My View

Just looking at those projections reinforces my opinion that the group’s shares are undervalued at the current 106p – I continue to have confidence in my Target Prices being achieved.

(Profile 17.09.24 @ 106.50p set a Target Price of 136p)

(Profile 18.06.25 @ 100.30p set a Target Price of 120p)