(Bloomberg) -- Naked Wines Plc shares rallied Wednesday, rising as much as 16% after the online vino retailer predicted it would report a surprise full-year profit despite a fading pandemic boost.
The gain was the steepest in more than five months, trimming the decline for the past year to 57%, after the company said adjusted Ebit for the year ended March 28 would be in “low single-digits.” Analysts at Jefferies had expected a small loss, while Investec had predicted breakeven.
Wednesday's move may have been exacerbated by relatively high short interest in the stock. Bearish speculators have been circling, with short interest at 7.4% of freely traded shares as of April 18, hovering near a 12-month high of 9%, according to data compiled by IHS Markit Ltd.
Having more than quadrupled during the first year or so of the pandemic, Naked Wines has erased most of its gains in the past 12 months. Drinkers flocking back to bars after virus restrictions were eased has spurred concerns around slowing demand, while a selloff in the broader tech sector has also hit the shares in recent months.
“We see this as a reassuring update,” Jefferies analyst Andrew Wade wrote in a note, maintaining his buy rating. Customer retention has remained strong, and the firm flagged no particular inflationary or supply headwinds, he said.
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