Berenberg lifts Asos price target

Berenberg upped its price target on shares of online fashion retailer Asos to 3,000p from 2,500p on Thursday, a day after it posted a slump in full-year profit on the back of restructuring costs.

The bank, which rates the stock at 'hold', said it was a "disappointing" year for Asos, with underperformance largely caused by operational issues associated with its warehouse transformations in the EU and US.

"However, with much of the transformational heavy lifting behind it, Asos is now in a position to leverage its investments," it said. Berenberg expects the company to report local currency sales growth of around 16% in period 1 FY 2020, underpinned by investments in the customer proposition, increasing product availability and an improved approach to Black Friday.

The bank downgraded its earnings before interest and tax estimates, largely due to a reduction in FY 2020 gross margin, and said the price target increase was a result of a reduction in its capex forecasts.

At 1240 BST, the shares were up 6.4% at 3,495.96p.