Financial Trading Blog
Stock of the day 05/04/2016 – ASOS PLC
Starting the New Year at £32.66 (that’s compared to its all-time high of £70-plus just 2 years earlier) ASOS’ stock soon suffered, combination of the macro-pressures that blighted the markets as 2016 began and a rather mixed post-Christmas update putting it on track to hit a near 6 month low of £26.66 by the middle of February.
That Christmas update, released on the 14th January, saw ASOS post a 22% rise in UK sales to £206.2 million for the final 4 months of 2016, alongside a 20% surge in international sales to £240.7 million (including 42% and 29% jumps in the US and EU respectively). Yet the excitement over this robust revenue growth was tempered by the news that ASOS had seen a 0.4% fall in its profit margins due to a series of price-slashing sales, helping put the stock on track to hit its aforementioned February nadir.
(Source: IT-Finance.com 05/04/2016)
Since then the stock the stock has admittedly seen a rather impressive turnaround, rising all the way back to a current trading price of £32.87 (IT-Finance.com, 05/04/2016), March seeing a serious of big gains even with Next’s sector-shaking warning over the state of 2016’s trading.
In terms of ASOS’ half year update next week, focus will be on the impact of those shrinking profit margins. Whilst the company (alongside online rival Boohoo) might be outstripping their high street rivals in regards to sales growth, if it is at the detriment of the company’s profits investors aren’t going to be pleased for long.
ASOS PLC has a consensus rating of ‘Hold’ with an average target price of £38.29.
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