Numis highlights buying opportunity at ASOS after recent pullback

2nd Apr 2014 09:51

The recent weakness in ASOS' share price is a good opportunity for shareholders to top up their holdings, according to Numis Securities, which said that the business is 'loaded with investment for growth'.The broker maintained its 'buy' rating and 7,500p target price.The online fashion retailer reported a profit before tax of £20.1m in the first half, down 22% below last year but ahead of Numis' recently lowered forecast of £19m.The decline year-on-year was due to the group's investment in its customer proposition, personnel, infrastructure and capacity.Margins fell in the first half "but we see the current P&L as one which is loaded with investment to support growth and drive a more efficient long-term operating cost base", said analysts Andrew Wade and Matthew Taylor.They highlighted ASOS' guidance for £2.5bn of sales as its next "staging post", saying that they have "little doubt" in this target on the back of its recent investment to support growth and drive a more efficient operating cost base."Following the trading update two weeks ago, we leave our forecasts unchanged and remain confident in the ASOS proposition - a unique global growth opportunity, with an investment-loaded P&L. We see the recent pull-back as an excellent buying opportunity and reiterate our positive stance."The stock was down 0.16% at 5,146p by 09:54, and is now down nearly 27% over the past month.BC