Analyst Andrew Wade from Jefferies maintained a Hold rating on ASOS plc (ASC – Research Report) and keeping the price target at p375.00.
Andrew Wade has given his Hold rating due to a combination of factors impacting ASOS plc’s financial performance and outlook. The company’s recent results show a decline in revenue by 13% at constant currency, although the adjusted EBITDA exceeded expectations at £42.5 million. This indicates some progress in profitability transformation and strategic initiatives, such as an increase in the Take Rate and Flexible Fulfilment contributions.
Despite these positive developments, the outlook remains cautious. The revenue growth forecast for FY25 is at the lower end of expectations, and while the EBITDA guidance aligns with consensus, the real challenge lies in FY26. ASOS aims to stop losing market share and generate significant free cash flow, but the current EBITDA margin improvement is overshadowed by ongoing revenue sacrifices and a pre-tax loss margin of 5%. These factors collectively justify the Hold rating, as they suggest potential but also significant risks and uncertainties.