ASOS PLC (LSE:ASC) shares rallied 20% to a 12-month high on Thursday following news that it intends to sell the lion’s share of its Topshop and Topman brands to a Danish clothing group.
This rally, however, barely scratches the 90%-plus decline in ASOS’ market valuation since hitting a peak in March 2021.
Analysts at City broker Shore Capital Markets poured more cold water on this rare ASOS win in their analysis of the joint venture announcement.
“We continue to have concerns that ASOS is losing market share, and ultimately this reduces our confidence in the visibility and sustainability of the group,” said Shore Cap.
The Topshop disposal and refinancing strategy announced today “should provide some near-term cushions”, said the broker, but ASOS nonetheless remains overpriced on an enterprise value-to-EBITDA basis relative to peers like Boohoo Group PLC (AIM:BOO).
As such, ASOS remains a sell in Shore Cap’s eyes.
UBS analysts are a bit more optimistic, stating: “The comfort on cash and potential EBITDA upgrades should be taken very positively by investors, even with some concerns around potentially restricted access on Topshop/Topman brands from here.”
However this was not enough for UBS to push the dial on its ASOS stock rating into buy territory.
UBS has a 12-month price target of 360p against the current spot price of 447.46p.