Boohoo PLC (LON:BOO) shares are not cheap but Barclays analysts believe the online fashion retailer will continue to grow fast and this means the stock is “not that expensive”.

Having undertaken a proprietary survey of more than 1,000 women around the UK, Barclays saw lots of positives around the company that indicates that it hasn’t missed the boat as it upgraded the shares to ‘overweight’ from ‘neutral’ with the target price hiked to 380p from 310p.

READ: Boohoo delights City with “another standout performance”

While the shares currently trade for 35 times forecast earnings, admittedly “not optically cheap”, Barclays said “on a growth-adjusted basis, they are not that expensive, and if we look at upside/blue sky earnings scenarios, which we see as quite credible, they offer good value”. 

The bank’s analysts argue that risks of Boohoo’s core brands slowing in the UK “are exaggerated” and in fact that collapses of other high street retailers in the last year or so has created “headroom” for Boohoo, removing anywhere from £500mln to £2bn of capacity out of the apparel and footwear market.

Boohoo’s recent acquisitions of Karen Millen and Coast “can unlock significant value over time”, the analysts reckon, even if they don’t grow as fast as some previous additions. 

Most importantly perhaps, Barclays reckons Boohoo’s abnormally high returns are sustainable due to its 100% private label policy, charging of delivery fees, and possibility of lowering input costs. 

As for concerns about the environmental damage from ‘fast fashion’, Barclays noted that Boohoo is starting to address this with the hiring of a sustainability director and introduction of sustainable ranges, but that the survey revealed it is not yet a priority for most consumers. 

“We do recognize there is a risk that consumers will start to care sooner than expected, and/or that it will take Boohoo longer to change perceptions.”