Financial Trading Blog

Stock of the day 30/03/2017 – ASOS PLC



Can ASOS maintain its astonishing run when it reveals its half year trading update next Tuesday?

Though not yet back at the heights hit in March 2014, where the fashion firm struck £71 before plunging to £18.50 just 7 months later, ASOS has nevertheless been on a remarkable climb in the last 15 months. Opening 2016 at £34.03, the company ended the year at £49.63, marking a 46% increase across the year – ASOS even only fell 1% on the day of the Brexit referendum result, as it stands to benefit from the weakened pound. Since the New Year began it has had another burst of energy, and now sits at a 3 year high, and current trading price, of £61.03 (IT-Finance.com, 30/03/2017).


(Source: IT-Finance.com, 30/03/2017)

This swelling stock price has been down to the company’s financials, pure and simple, and its most recent statement proves this quite nicely. For the four months to the end of December ASOS recorded an 18% rise in UK retail sales to £244 million, with a 52% surge internationally to £361.7 million, in part thanks to sterling’s softening post-Brexit. This update came only a couple of weeks after ASOS announced it was significantly expanding its London work force to accommodate its growing stature, the company aiming to add 1500 employees in the next 3 years.

Understandably this should lead to a pretty impressive set of interim results next week. Analysts are expecting ASOS to post a 38.8% increase in first half revenue, from £667.3 million to £926.36 million year-on-year, alongside a 22% jump in earnings per share, from 20.3p to 24.83p. Forecasts for the second half of the year will also be important, especially if ASOS shows any signs of slowing down.

ASOS PLC has a consensus rating of ‘Buy’ with an average target price of £53.72.

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