The turnaround at online retailer ASOS PLC under boss José Antonio Ramos Calamonte is “underappreciated", according to UBS.
It believes the retailer is addressing the “key areas” of underperformance such as basket economics, assortment management, sourcing and inventory management through its 'Driving Change' plan.
“The margin rebuild and profit recovery from this plan are underappreciated, in our view,” it added.
The Swiss bank said data showed lower promotions year-on-year in the second half from a reduction in stock keeping unit count which gives it encouraging evidence of delivery on the new strategy.
It thinks results due in October should point to clear progress in profit and cash delivery and reassure investors.
UBS has upgraded the stock to 'buy' from 'neutral' although its 12-month price target moved to 550p from 660p.
Shares reacted well, rising 3.5% to 391.80p.