Kogan.com Ltd (ASX: KGN) shares have been strong performers in recent months.
Thanks to a marked improvement in the ASX stock's performance, investors have bid the ecommerce company's shares almost 40% higher since the middle of February.
Does this mean it is too late to invest? Let's see what Bell Potter is saying about the company.
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What is the broker saying?
Bell Potter was pleased with Kogan's recent trading update, highlighting that its performance was tracking ahead of expectations. It said:
Kogan.com (KGN)'s FY26 to-date trading update (Jul-Apr) from a gross sales and adjusted EBITDA perspective was tracking ahead of Consensus/BPe (BPe below Consensus). KGN delivered gross sales growth of 18% for the first 10 months, while Adjusted EBITDA of $38m at an 8.5% margin (% of revenue) remained towards the top end of the margin guidance range of 6-9% for FY26.
The Feb-Apr non-seasonal period appears to have grown at 14% in gross sales at Kogan.com (Aus), which we see as a healthy outcome while cycling 22% comps in the pcp (based on BPe). NZ based Mighty Ape (MA) having completed majority of restructuring initiatives post-optimisation of the platform and inventory continues to expect reaching profitability on a run-rate basis in 2H26.
In response, the broker has boosted its earnings estimates. However, it has only done so conservatively given the importance of the EOFY period. It adds:
We make changes to our gross sales (GS), gross margin and EBITDA assumptions for Kogan.com factoring in the beats and the current run-rate, however with some conservatism for the EOFY seasonal period in May/Jun which cycles +27% GS in the pcp. With group revenue growth to-date tracking in line with BPe +6% for FY26, our revenue estimates remain largely unchanged as we factor in some cautiousness ahead given the current weak consumer spend environment. Our medium-term Adjusted EBITDA margins remain broadly unchanged towards the bottom end of KGN's target margin range of 8-12%. The net result sees our NPAT forecasts +18%/+6%/+2% for FY26/27/28e.
Should you buy this ASX stock?
According to the note, Bell Potter has retained its hold rating on Kogan's shares with an improved price target of $4.20 (from $3.80).
This implies only modest upside from its current share price of $4.11.
Commenting on its recommendation, the broker said:
Our PT +11% to $4.20 (prev. $3.80) driven by earnings upgrades and a roll-forward of earnings within our relative valuation (FY27e EBITDA), while our 10x target multiple remains unchanged. While KGN has seen beats in both 1H and 2H to-date, we remain cautious on the FY27 period across our overall Consumer Discretionary coverage to see some downside risk to the current growth rate in optimising for EBITDA margins within KGN's target range of 8-12% in a challenging and competitive e-commerce landscape. We continue to view EBITDA margins as highly sensitive to the investment into sustaining the GS/customer/subscriber growth. At our revised PT of $4.20 the total expected return is <15% so we maintain our HOLD rating.
