Peel Hunt has halved its target price for ASOS PLC (LSE:ASC) after cutting its full-year profit forecasts, as it feels the clothing firm's early autumn/winter collection release is not catching customers’ eyes.
Analysts at the brokerage slashed their target price for ASOS to 750p from 1,500p while maintaining a 'Hold' rating on the stock.
Much of the reduction is down to macro-concerns, gaps in the management team, balance sheet pressure and the need to drive brand awareness in the US, the analysts said.
In a note to clients, the analysts said following June's trading update they have set their full-year profit before tax range for ASOS at somewhere between £20mln and £60mln, much of which depends on recent trading improvements.
However, not even the release of the autumn/winter range earlier than usual could tempt customers into buying, with trading remaining subdued as the market shops for need, rather than want, according to the Peel Hunt analysts.
Additionally, the analysts said that ASOS is “very focused on cash right now,” and that a cautious view on consumers and the wider outlook means revenue growth will be limited.
However, despite the macro environment, “there is a lot of confidence in delivering cost efficiency and working capital", they concluded.