Proactive Investors - Shore Capital Markets expressed caution on ASOS (LON:ASOS) shares following the online retailer’s half-year earnings and guidance.
With sales down 18%, ASOS kept its full-year revenue guidance unchanged at a 5-15% decline, but Shore Cap said “there could be a risk of this now being closer to the lower end” unless the group sees a notable reverse in trading performance in the second half.
Shore Cap sees full-year adjusted EBITDA falling 28% year on year to £89.5 million, with a margin of just 2.6%.
“Set against a challenging consumer backdrop and tough competition from both online and omnichannel players, we believe ASOS could continue to see its gross margin under pressure,” said the broker.
“Whilst we see some green shoots in terms of the wider disposable income backdrop over the medium term, we believe uncertainty remains and that ASOS will need to work hard to remain competitive and improve sales trends.”
Sell at 346p is Shore Cap’s recommendation.
Not that the market was listening. Shares were up more than 9% to 378 in late-Tuesday trades.