Citi Downgrades Allegro to Neutral After 63% Rally, Lifts Price Target

Citi has downgraded Polish e-commerce giant Allegro (WA:ALEP) to "Neutral" from "Buy", concluding that the stock's powerful 63% year-to-date rally has created a more balanced risk-reward profile for investors. Following the news, Allegro shares traded down 1.8% to PLN 49.71 in early trading, underperforming the broader WIG20 index.

Valuation Prompts Rating Change

In a research note published Thursday, Citi stated that while its view on Allegro's operating outlook has become more constructive, the significant appreciation in the company's share price this year now largely reflects that optimism. The downgrade is primarily a valuation call, suggesting limited near-term upside after the strong performance.

Despite the downgrade, the bank increased its price target on Allegro to 52 zlotys from 42 zlotys. This new target is slightly above the stock's previous close of 50.48 zlotys on September 30.

Upgraded Forecasts Follow Strong Results

Citi's increased price target is supported by upward revisions to its financial model, which were made following Allegro’s recent second-quarter results and improved company guidance. The bank has become more optimistic about the platform's growth trajectory.

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Key forecast adjustments from Citi include:

• Gross Merchandise Value (GMV): Forecasts for 2026-2028 were raised by approximately 4%.
• Active Buyers: Growth forecasts were lifted by an average of about 1 percentage point.
• Net Profit: Reported net-profit forecasts were increased by 8.9% for 2026, 7.6% for 2027, and 13.0% for 2028.

These revisions place Citi's estimates approximately 3.5% above the IBES consensus, according to the note. The bank now projects Allegro's revenue will grow from 13.67 billion zlotys in 2026 to 17.98 billion by 2028.

Context for Investors

Allegro is the dominant e-commerce marketplace in Poland, holding what Citi estimates to be about half of the country's market share. While continued expansion of the Polish market and regional growth opportunities remain potential catalysts for the company, Citi's latest analysis suggests these positive factors are now largely priced into the stock's current valuation.