Asos: Deutsche Bank cuts TP, but still buying

(CercleFinance.com) - On Friday, Deutsche Bank lowered its target price for Asos from 500 pence to 485 pence, but renewed its buy recommendation on the stock.


In a note, the broker believes that the business update and refinancing announced yesterday have reduced the uncertainty associated with the dossier.

In its view, investors have reason to be reassured by the measures taken to reduce the debt burden, not only thanks to the planned sale of the Topshop chain, but also because of the better-than-expected earnings outlook for 2024.

He is therefore not surprised by the positive reaction to these initiatives.

With regard to the monetization of Topshop, one of Asos' core brands, the analyst points out that the transaction will reduce debt by £118 million, which he estimates at around E300 million, while enabling Asos to retain the brand's distribution rights for at least ten years.

With regard to refinancing, Deutsche Bank points out that the maturity of the online ready-to-wear group's debt will now be extended to 2028.


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