Analysts at JPMorgan lowered their target price on online clothing retailer Asos from 6,800.0p to 6,680.0p on Friday following its full-year 2021 results preview.
JPMorgan expects Asos, which will report its full-year results on 13 October Across regions, to have traded broadly in line with guidance in July and August and has left its pre-tax profits forecast unchanged at £192.0m, in line with company collated consensus.
However, JPM stated that looking ahead to 2022, it was “mindful of margin pressures” from freight inflation and Brexit, along with the launch of its Litchfield warehouse.
“Whilst these are all issues already called out by Asos, we lower our (previously ahead of consensus) FY22 PBT forecast to better capture the financial impact, and now look for £188m (previously £212m), leaving us c.6% below consensus (£201m),” said the analysts.
JPM, which stood by its ‘overweight’ rating on the stock, added that Asos shares had continued to drift following its third-period trading update, partly due to investor expectations of outer year margin cuts.
“Nevertheless, we think visibility of improving trends in markets such as the US is needed to support an improving valuation, albeit we do expect the upcoming results to showcase ongoing positive change in the business including the roll-out of flexible fulfilment and a further strengthened own label proposition,” concluded JPM.
