BofA double upgrades Asos to 'buy'

Among the reasons cited for the move, they said analysts' profit estimates were too low, the possible positive impact from the economy reopening on demand for its core "going out" product, the acquisition of Arcadia, "undemanding" valuation and "flexible fulfilment optionality".

They also explained that their 2021 profit estimates for the firm were 20% ahead of consensus while the purchase of Arcadia should boost growth and add to the company's margins, especially in 2022.

Indeed, even Asos's own guidance for 2021 profits before tax of £170m was "conservative" (BofA: £199m).

Furthermore, the acquisition was expected to deliver a double-digit return on capital.

As well, they argued that Flexible Fulfilment could add long-term optionality.

On the company's valuation, they pointed out that it was at a 50% discount to that of rival Zalando, with the shares changing hands on one time's the firm's estimated 2022 enterprise value to sales multiple.