Analysts at Berenberg lowered their target price on fast-fashion retailer Asos from 6,500.0p to 5,500.0p on Tuesday, stating the firm’s near-term outlook had been impacted by Covid-19-related volatility.
However, Berenberg stated that looking beyond this period of disruption, it believes that the company’s growth can “accelerate well”.
In fact, should the company make good progress towards its new, and much-anticipated, medium-term target of £7.0bn in revenues, alongside at least a 4% underlying earnings margin, the analysts highlighted that there was “likely significant upside” to its current share price.
The German bank believes that Asos has many years of double-digit growth ahead of it and is also FCFE-generative and in a rock-solid balance sheet position.
“With the company trading on just 0.6x/0.5x CY22/23 EV/sales and 21x/17x EPS respectively, we think that there is significant upside to the current share price on a 12-month view,” said Berenberg, which also reiterated its ‘buy’ rating on the stock.
