ASOS sitting pretty as Jefferies, Shore sing its praises

ASOS was sitting pretty on Tuesday as Jefferies and Shore Capital extolled its virtues.

Jefferies upgraded its stance on the online fashion retailer to 'buy' from 'hold' and hoisted the price target to 9,000p from 5,000p, highlighting its winning model.

"In a world of rising consumer expectations, we view ASOS' functionality rich digital platform as a long-term winning model," the bank said. It expects technology-led growth to drive a three-year sales compound annual growth rate of 26% and a core value per share of 8,000p. It sees the potential for ASOS to grow conversion rates to 3.8% by FY22E and grow above its mid-term guidance, leading it to ascribe another 1,000p to its price target.

Jefferies said the company's market-leading user experience is "a key competitive advantage", noting that its survey of 21 clothing retailers - both UK and international - ranked ASOS the highest for the functionality of its website.

Meanwhile, Shore Capital reiterated its 'buy' stance on the group, pointing to its continued and sensible investment in building infrastructure, product range and capabilities, as it chases its stated goal of being a global fashion destination for 20 somethings.

"In our view, ASOS remains well on track to deliver that ambition given that the UK now only represents 38% of group revenue. ASOS is developing its brand footprint and has simultaneously become a media creator and lifestyle content publishing platform, alongside the transactional website."

Shore upgraded its FY2018 earnings numbers by around 3% following the company's trading update on 25 January, to reflect the increased sales momentum during peak trading. Its forecasts now sit just above the ASOS-compiled consensus for revenues of £2.46bn and pre-tax profit of £101m for FY2018.

At 1250 GMT, ASOS shares were up 2.2% to 7,539.42p.