Broker snap: Peel Hunt upgrades ASOS to buy

5th Dec 2011 10:43

Peel Hunt has upgraded its rating for ASOS from hold to buy, saying that the recent share price weakness provides a "rare buying opportunity for a leading global online growth retailer.""The UK market is far from mature, while international growth potential looks as strong as ever, before we take account of future own-language sites for key markets such as China," said analyst John Stevenson.The broker says that the shares are trading at 24 times 2013 (end-March) earnings and offering three-year compound earnings per share growth of 49% until 2015, which represents a "marked discount" to international online peers and the Peel Hunt Online B2C Index."In addition, the combination of rising operating cash flow and the completion of the new warehouse provides the basis for cash balances to build quickly over the next three years, suggesting the maiden dividend may arrive sooner rather than later," Stevenson added.The target price stays at 1,900p.By10:42 on Monday, shares were trading 6.03% higher at 1,442p.BC