ASOS PLC (LSE:ASC) has seen its price target cut at Deutsche Bank, with the German bank snipping its level to 375p from 440p, because of a somewhat elongated timeline for recovery.
DB analysts, in a note, noted that the fashion retailer’s turnaround remains on track, but the wait for meaningful sales growth will be “longer than hoped.”
ASOS delivered £132 million in earnings (adjusted EBITDA) in last Friday's trading update, but. guidance for FY26 earnings (adjusted EBITDA) was pitched at £150 milion to £180 million, which disappointed, and prompting DB to cut its own forecast by 15%, from £197 million to £169 million.
Full-year sales are now forecast to fall some 4%, amid a weaker-than-expected exit rate in the second half of FY25, where sales declined 15%.
Even so, Deutsche Bank analysts stress that ASOS’s long-term ambitions remain credible. Management is still targeting 8% adjusted EBITDA margins, supported by capex normalising towards 3–4% of sales and a structurally improved cash generation profile.
While FY26 free cash flow expectations drop sharply, from £28 million to just £4 million, the broker makes “limited changes” to free cash flow estimates, and continues to predict as operational foundations strengthen.
ASOS shares were down 4.7% changing hands at 222.99p.