ASOS plc (LON:ASC) produced some punchy sales numbers with its post – Christmas trading update, but the City’s opinion is divided.
The online clothes retailer is one of AIM’s stars and valued at £4.5bn, but Deutsche Bank suggests that may be too rich while Goldman Sachs reckons it is too low.
Helped by price cuts, sales in the four months to December rose by 36% with a 52% rise overseas.
Top line growth this year should be 25-30% and a still impressive 20-25% per year in the medium term added the firm.
Goldman tweaked its sales estimates higher after the update, but left profits forecasts unchanged as ASOS management has made it clear it would continue to spend heavily to support the rapid sales growth.
Even so, the broker believes the market underestimates ASOS edge in combining social marketing and digital commerce and is a buyer with a 5,800p target.
Deutsche Bank was impressed in particular by the performance in Australia, but also noted that the strong revenue growth is encouraging management to spend more, which means profits are not rising in step.
The German broker has raised its target to 4,850p, but that is still some way shy of the current market price of 5,473p, up 2% today, though with such strong sales momentum ‘hold’ is its view.