ASOS PLC (LON:ASC) was upgraded to ‘buy’ from ‘underperform’ by Jefferies as analysts expect the online retailer to gain market share from high street closures.
The price target was raised to 2,300p from 2,000p, as the pandemic is forecast to accelerate the shift to online buying.
READ: ASOS moved to ‘sell’ by Liberum as fundraise “may not be enough” to survive pandemic
The AIM-listed fashion shop said on Tuesday sales dropped by 20-25% in the past three weeks as customers prioritise their spending elsewhere, prompting heavier promotional activity.
It then proposed a share placing, which raised £247mln, and announced plans to extend a £60-80mln credit facility to cope with the coronavirus crisis.
Jefferies said the fundraise should cover for “at least” 18 months of impacted trading.
READ: ASOS raises £247mln in placing as sales drop by a quarter amid coronavirus disruption
Although it is hard to predict how the crisis will progress, Jefferies forecast a return to profit in 2021 and a fuller recovery in 2022.
The financial year to August would see a loss before tax of £42mln, implying a £72mln loss in the second half.
Shares jumped 28% to 1,989p on Wednesday at noon.