Deutsche Bank Lifts ASOS Target to 490p, Keeps Buy

Deutsche Bank raised its price target on ASOS (LON: ASC) to 490p from 450p and kept its buy rating in a new note. ASOS is an online fashion retailer whose brands include ASOS Design, Topshop, Topman and Miss Selfridge. Panmure Liberum also lifted its target, to 420p from 330p, but stayed at hold.

ASOS shares closed on Friday at 416.5p, up 0.48% from 414.5p the previous session, after a 1.78% fall on Thursday. Friday’s range ran from 405p to 426.5p. Deutsche’s target sits 17.6% above that close, while Panmure’s is 0.8% above it.

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Deutsche’s note followed ASOS’s guidance for adjusted EBITDA (earnings before interest, tax, depreciation and amortisation, stripped of one-off items) of £180m to £200m in the 2027 financial year.

Deutsche’s Adam Cochrane said the guidance was potentially 5% above his previous mid-point and encouraging despite weaker assumptions for GMV, the total value of goods sold.

Cochrane also sees improving underlying sales trends in ASOS’s major markets. He estimated that the cyber incident has cut group GMV by 2% to 4% since the 6th of October, with the hit easing sequentially.

Panmure Liberum’s Anubhav Malhotra and Wayne Brown pointed to a recovery in the numbers. Fourth-quarter GMV rose 4% after a 5% decline across the financial year, and gross margin widened by 340 basis points (3.4 percentage points) to 50.5%. Adjusted EBITDA rose 29% to £170.3m.

Panmure Liberum flagged cash. Free cash flow, the cash left after running costs and investment, was an outflow of £16.4m, against an inflow of £14.1m a year earlier. Malhotra and Brown also questioned how much long-term growth ASOS can find in an increasingly competitive online fashion market.

The shares are up about 82% from 229p on the 1st of May, yet remain about 19% below their 517p 52-week high.