Berenberg lowers target price on Asos ahead of CMD
Analysts at Berenberg lowered their target price on online clothing retailer Asos from 6,700.0p to 6,500.0p on Monday ahead of the firm's capital markets day next month.
Berenberg said with Asos' first CMD since 2016 coming six weeks prior to the end of the calendar year, it believes that 2021 full-year numbers will be "well underpinned".
The German bank stated that while it believes that there was upside risk to its 2022 revenue expectations, it opted to reduce its full-year adjusted underlying earnings margin forecast by 30 basis points to 4.5%, in part reflecting widely publicised freight rate increases and Brexit-related costs.
"Given the temporary nature of some of these headwinds, the changes to our outer-year margin forecasts are minor. Notably, even with our new margin forecasts, we still expect Asos to generate over £100.0m of FCFE in FY22," said Berenberg.
The analysts also said they reckon that Asos' CMD could provide "an attractive positive catalyst", leading it to reiterate its 'buy' rating on the stock.
"We believe that a well communicated strategic update at the CMD has the potential to materially improve investor sentiment and – given the above valuation gap – has scope to drive a significant re-rating."