JPMorgan upgrades Asos to 'overweight'

The bank pointed out that even before the Covid-19 crisis but as recently as nine months ago, fast-paced expansion and a lack of management bandwidth combined to cause "creative missteps", warehouse issues and slowing demand and lower profitability.

"However, roll-forward and the group has significantly strengthened the board, addressed mistakes with tangible changes resulting in re-engagement of demand, but also overall better operational grip than we have ever seen at the company - as highlighted by improved results and KPIs over a now six- month period," it said.

It also said that the recent capital raise provides sufficient funds for Asos to manage through the virus outbreak and could well leave the balance sheet in a more robust position even as we exit the crisis period.

"In summary, we believe navigating through recent challenges has created a stronger Asos, and we upgrade to ‘overweight’," JPM said.

It cut its price target on the stock to 3,500p from 3,800p.