RBC bumps ASOS up to 'outperform' after share price weakness

1st Sep 2015 13:06

(ShareCast News) - RBC Capital Markets raised ASOS to 'outperform' from 'sector perform' with an unchanged target price of 3,750p saying recent share price weakness represents a buying opportunity.It noted that the shares have declined by more than 20% over the last three months and the stock now trades in line with its five-year price-to-earnings average."ASOS's top line should continue to benefit from price repositioning and further delivery enhancements such as speed, later cut-off times and click & collect options," said the Canadian bank.RBC said it's optimistic about the impact of local buying on the gross margin and it sees scope for EBIT margin expansion post full-year 2016.The bank forecasts an 18% three-year revenue compound annual growth rate in the UK led by further delivery improvements including an extension of the Boots Click and Collect trial, new brand additions and the likely rollout of the ASOS Rewards loyalty scheme."In our consumer survey, ASOS came top in the UK for range and overall website, while its delivery and mobile offering were ranked in second place."At 1306 BST, ASOS shares were up 1.5% at 3,040p.