DAVY VIEW

Once upon a time, people didn’t think fridges and televisions would ever be bought online. AO World (AO) – a retailer specialising in electrical goods – has innovated for 20 years and delivers a great customer experience in the UK and Germany, evidenced by market-leading NPS scores. COVID-19 has accelerated consumer adoption of the AO way, delivered FY21 revenue growth of 59% and step-changed AO’s scale. If there is a gap in the story, perhaps it is converging financial guidance with the strategic vision. Consensus 20/23 earnings growth is an impressive +38%; however, although the business has held onto the COVID gains, so has the equity – we see it fairly valued and initiate with a ‘Neutral’ recommendation.