Goldman sees "compelling entry point" at ASOS after recent sell-off

10th Jun 2014 11:10

In the aftermath of ASOS' profit warning which sent its shares plummetting, Goldman Sachs has added the stock to its 'conviction buy' list, saying that investors should take advantage of the recent sell-off.The shares, up 1.6% at 3,250p on Tuesday morning, were still down 27% on last week after ASOS cut its margin guidance for the full year in a third-quarter trading update. The company blamed an increase in promotional activity and higher mix of lower-margin UK and European sales for the downgrade."ASOS' recent share-price underperformance provides a compelling entry point into a high quality online pure-play," Goldman said.The bank has reduced its profit forecasts for the company over the next three years and has lowered its target price for the stock from 6,250p to 5,750p."Through FY14 the company's trading performance has slowed materially and profit margins have fallen. However, in our view neither impairs our long-term view for the company and indeed increased 'localisation' of the ASOS offer via zonal pricing, regional distribution hubs and country-specific merchandising teams are all positive initiatives for the company."BC