Analysts slash forecasts for ASOS after profit warning

16th Sep 2014 09:40

Brokerages have slashed their target prices for ASOS in the aftermath of a profit warning by the online fashion retailer on Tuesday, which sent shares sharply lower.The stock was down 10.5% at 2,168.25 by 10:34 after ASOS warned that profits in the year to August 2015 would be at a "similar level" to the year just finished.While pre-tax profit in the year ended August 2014 will be in line with market expectations of around £45m, next year's profits will be affected by "significant investments" in international pricing and its logistical infrastructure and technology platform.Analyst John Stevenson from Peel Hunt had previously pointed out that the £63m consensus forecast for next year looked "overly optimistic", but said he was "surprised by the scale of the downgrades implied"."With no profit growth and other e-commerce stocks offering higher growth and margin potential, we see ASOS shares losing ground," he said.Meanwhile, Helal Miah from The Share Centre said that investors should 'hold' the stock "while the business goes through a difficult time".Below are some of the brokerages that cut their target prices for Asos on Tuesday:Numis: Target price reduced from 6,000p to 3,000p, 'buy' rating maintained.JPMorgan Cazenove: Target price reduced from 4,250p to 3,100p, 'overweight' rating maintained.Cantor Fitzgerald: Target price reduced from 2,500p to 2,000p, 'hold' rating maintained.Peel Hunt: Target price reduced from 2,500p to 1,750p, 'hold' rating maintained.