Broker snap: ASOS, exciting but expensive

24th Jan 2011 11:46

Broker finnCap said that ASOS remains one of its favourite retail growth stories but one of its least-favourite shares, as the online fashion group is an exciting, but expensive, stock.ASOS's third quarter retail sales increased by 59%, with UK sales growing by 22.6% and International sales surging by 156.4%. "Of course, the UK rate will have been depressed by the disruption to deliveries caused by the snow in December," said analyst David Stoddart.While the broker's initial reaction to the strong performance in the period was that it created further forecast upgrade potential, "it has subsequently emerged that extension of the free delivery and returns offer into the fourth quarter will offset this. Allowing also for additional costs of handling the disruption caused by the snow in December, we have trimmed our forecasts," Stoddart said.While finnCap's target price for the stock has been raised from 980p to 1,225p, the broker has cut its 2011 pre-tax profit forecast by around 5%. A 'sell' rating is retained.