Broker snap: Collins Stewart remains a buyer of ASOS

19th Jan 2012 11:07

Collins Stewart has reiterated its buy rating on online clothes seller ASOS after the firm said that third quarter sales jumped 46% year-on-year, underpinning full-year expectations.The broker says that the stock should react positively to this strong update and they did, rising 18.63% to 1,770p in mid-morning trade, well past the its current target price of 1,700p."Against a challenging global economic backdrop, we are encouraged that ASOS has been able to maintain its high level of top-line sales growth. The business has a much more flexible model now that its Barnsley distribution centre is fully operational," said analyst Wayne Brown.While the broker admits that the shares are not cheap on conventional metrics (trading at 33.5 times earnings for the year ending March 2012), "that is more than underpinned by high earnings per share growth rate"."We look forward to the prelims when we expect an update on the groups plans to enter the Asian market, in particular China, which should lead to a re-appraisal of medium to long term growth targets," Brown added.BC