Asos share price: Jefferies trims stance on retailer

Written by: Tsveta van Son
March 11, 2020

Analysts at Jefferies have slashed their rating and share price target on Asos (LON:ASC) following the online fashion chain’s profit warning last month. The move marks another blow for the AIM-listed company, whose shares came under pressure yesterday as it emerged that the group was targeted by short sellers.

Asos’ share price, which fell in the previous session, has surged in London this morning, having gained 1.49 percent to 2,181.00p as of 08:18 BST. The group’s shares, however, have given more than 63 percent of their value over the past year.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Jefferies trims stance on Asos

Jefferies lowered its recommendation on Asos from ‘buy’ to ‘underperform’ yesterday, further slashing its share price target from 3,500p to 2,000p. Citywire quoted the broker’s analyst Caroline Gulliver as commenting that the analysts saw further downside risk for the online fashion retailer.

“We anticipated Asos will need to invest in a combination of gross margin, distribution and marketing to reaccelerate sales growth and against a tough macroeconomic backdrop,” she elaborated, adding that “this would limit the margin rebuild to 1.6 percent in 2020 and 2.5 percent in 2021 and ‘with forecasts 20 percent below consensus for 2020 we move to ‘underperform’.”

Her comments follow Asos’ profit warning last month, marking the third time the company has cautioned on profits since December, with the group citing ‘disappointing’ performance in the first half of its financial year. The company now expects to deliver full-year profits of between £30 million and £35 million.

Other analysts on online retailer

According to MarketBeat, the AIM-listed company currently has a consensus ‘hold’ rating, while the Asos share price stands at 3,209.19p. As of August 15, the consensus forecast amongst 30 polled investment analysts covering the online retailer for the Financial Times advises investors to hold their position in the company.