Berenberg lifts ASOS target price after Q3 trading update

Berenberg has reiterated its ‘buy’ rating on ASOS and raised its target price to 5,100p from 4,100p after the fashion retailer reported better-than-expected third quarter revenues.

ASOS on Tuesday reported a 30% rise in total sales for the four months to 30 June and said it expects full-year sales growth to be at the upper end of the 20-25% range.

Total retail sales grew to £500.5m from £386m in 2015, beating analysts’ expectations of around 23% growth.

Sales in the UK were up 28%, while sales in the US rose 53% and EU sales advanced 32%.

In the rest of the world, sales were up 16%, while international retail sales grew 31%.

Berenberg said ASOS significantly outperformed consensus revenue expectations despite challenging conditions across the sector.

“On an underlying basis, management guidance cautiously implies a slowdown in the fourth quarter of 2016 and fiscal year (FY)2017, although to date its UK and EU performance has not been negatively affected by Brexit-related uncertainty plaguing many of its retail peers,” Berenberg said in a note to investors.

“We continue to believe ASOS is a long-term structural winner and increase our earnings per share forecasts by 8%/5%/-3% in FY 2016/FY 2017/FY 2018 respectively to reflect accelerated top-line growth.”

Shares rose 0.65% to 4,502p at 0949 BST.