AO’s 1H26 trading update yesterday has once again proven the power of its 5* customer service focussed business model. Group revenue is expected to increase 13%, with B2C Retail revenues +11%, and FY26E Adj. PBT is anticipated to be at the upper end of the previous guidance range (now £45m-£50m). Moreover with c.£70m net cash at the half year end, AO is launching its first £10m share buyback. In this report we review AO’s attractive investment case and raise our cal 2026 Adj. PBT by 5%, Adj. EPS by 6% and our fair value by c.7% from 150p to 160p. Hence, even though the stock has recovered some its summer weakness with a rise back to 95p, it is still materially below our fair value.
