Liberum Capital said Virgin Wines UK PLC (LON:VINO) offered high growth yet predictable earnings as it initiated coverage of the online wine retailer.
“We see multiple years of high growth ahead,” it said, calling Virgin Wines a compelling investment case.
Virgin Wines is one of the UK’s largest direct to consumer wine retailers and it has more than 160,000 active customers.
“Virgin Wines offers access to D2C digital growth, with the predictability of subscription revenues,” Liberum noted, adding that “numerous macro-tailwinds support long-term growth”.
The house broker said the retailer had “a unique sourcing model that drives high gross margins coupled with a tightly managed range [that] turns stock rapidly.
“A low operating cost model and a disciplined approach to customer acquisition drive high EBITDA margins.
“A management team with an enviable record offers stability and experience through a disciplined growth strategy and a relatively capital light asset base.”
Shares in Virgin Wines started trading on London’s Alternative Investment Market last month.