logo-loader
viewASOS PLC

ASOS upgraded to ‘buy’ by Berenberg as confidence restored

The price target was upped to 4,200p as analysts believe the problems were caused by capacity constraints rather than weaker consumer sentiment

ASOS PLC - ASOS upgraded to ‘buy’ by Berenberg over restored confidence

ASOS PLC (LON:ASC) was upgraded to ‘buy’ from ‘hold’ by Berenberg as analysts see upside following the online retailer’s annus horribilis.

The price target was upped to 4,200p from 3,000p as sales performance over peak trading demonstrated the resilience of the new logistics infrastructure.

READ: ASOS posts “better than expected” sales driven by Black Friday

In October, the AIM-listed firm posted a 68% plunge in profit before tax to £33mln after severe disruption at its new US and European warehouses.

But the fashion retailer learnt from its mistakes and increased investment to improve its infrastructure.

As a result, the current financial year started with better than expected sales, driven mostly by Black Friday.

The analysts remain optimistic that the problems were due to capacity constraints, rather than weak consumer sentiment or stronger competition.

“With the new infrastructure holding up well over peak trading and brand positioning back on track, together with a ramp-up in US marketing and a strengthening of the management team, we believe the recent reacceleration in revenue growth is sustainable,” analysts said in a note.

There is “significant” overseas growth opportunity driven by international warehouses, while Berenberg's forecasts point to ASOS returning to profit margin growth of 4% from the current 1.3% as it boosts efficiency.

Shares rose 3% to 3,425.97p on Monday at noon.

Quick facts: ASOS PLC

Price: 2820 GBX

AIM:ASC
Market: AIM
Market Cap: £2.81 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: Sweet Earth Holdings goes public listing on the CSE under...

Sweet Earth Holdings (CSE: SE) CEO Peter Espig and CFO Chris Cooper joined Steve Darling from Proactive Vancouver to discuss the company that operates a large facility in Oregon which is the start of their process of going to seed to sale. Espig talks about all aspects of the company...

3 hours, 29 minutes ago

2 min read