ASOS PLC (LON:ASC) is now “stronger” after navigating a series of challenges in its business as well as the coronavirus pandemic, according to analysts to JP Morgan as they upgraded the retailer to ‘overweight’ from ‘neutral’.
In a note on Wednesday, the investment bank said while the online clothing giant had previously suffered a number of “creative missteps” and warehouse issues which had hit demand and profitability over the last 18 months, since then it had “addressed mistakes with tangible changes resulting in re-engagement of demand” as well as an “overall better operational grip”.
The bank added that a £247mln fundraising by the company last week “provides sufficient funds for Asos to manage through this crisis, and indeed could well leave the balance sheet in a more robust position even as we exit the crisis period”.
“In summary, we believe navigating through recent challenges has created a stronger Asos”, JP Morgan said, although the bank did trim its target price to 3,500p from 3,800p and said they still expected “a bumpy road ahead” for the sector over the coming months.
ASOS shares were up 1.7% at 2,269p in late-morning trading.