Broker snap: Panmure downgrades ASOS after strong run

17th Dec 2013 09:43

Analysts at Panmure Gordon have cut their rating for online fashion retailer ASOS from 'buy' to 'hold' after the stock's impressive performance so far this year."ASOS shares have risen 124% year-to-date to trade at all-time highs," said analysts Simon French and Karl Burns.The broker has made minor changes to forecasts to reflect modestly reduced sales growth assumptions, which leaves the stock trading at 59.7 times 2015 earnings with a three-year earnings compound annual growth rate of 32.7%. "We do not believe this rate of earnings growth can support further share-price appreciation in a market that appears to be increasingly competitive," they said.The analysts believe that much of the stock's trajectory for 2014 will be determined by its operations in China where it is too early to judge the potential success.They also highlighted the growing competition within the mobile market, which is providing smaller operators "with a route to reach new customers supported by an ever present voice on social media, thus reducing the influence of larger brands".Despite the downgrade, Panmure has raised its target price for ASOS from 5,950p to 6,126p.The stock was down 0.84% at 5,968.5p by 09:55.BC