Deutsche Bank slashes target price on Asos

At this point, Deutsche Bank said both internal and external factors were weighing on Asos and noted that it sees earnings risk to the downside and valuation risk to the upside.

In the short term, the lack of a chief executive and a cautious tone to guidance suggested a greater risk of further negative earnings momentum at this stage.

The German bank highlighted that it was not clear what will drive a re-rating in a rising yield environment but said the absolute valuation at roughly 21x full-year 2022 earnings and an approximately 15x FY23e price-to-earnings ratio and 0.3x enterprise value/sales ratio was "attractive" on a 12-month view.

"We believe that Asos has a relevant consumer proposition with a large addressable market and will grow its earnings at a 20% CAGR 2023-25; once investors can look through the remainder of 2022, the stock should start to re-rate," said DB.

"Timing will be hard to call but we believe that the valuation already reflects much of the downside risk and therefore reiterate our 'buy' recommendation on a lowered 2,900.0p price target."