Today’s Q1 signals a couple of key changes, which should be the catalyst for rating expansion. 1) GMV returned to growth in May (+8%). Alongside margin gains, lower RTNS and cost actions, we see upside risk to EBITDA guidance. 2) Guidance to reduce ND and leverage to <1x has been reiterated, with scope for step-changes from DC disposal proceeds. Confidence in the outlook has increased after an inflection to growth, and as the turnaround broadens out across the portfolio. After falling below our target price, we are therefore upgrading from Hold to Buy as DEBS enters a new cash generative growth phase.
