Asos Cut at Credit Suisse on Lack of Strategy Clarity

Online fashion retailer Asos (LON: ASC) has risen Wednesday, despite the company’s shares being downgraded to Neutral from Outperform by Credit Suisse

Asos is currently up 1.55%, trading around the 620.5p mark. However, the stock is still down more than 74% in 2022.

Credit Suisse analyst Simon Irwin also slashed the firm’s price target on the stock to 660p from 1,250p, telling investors in that he sees a shortage of clarity on the company's strategy and operating model. 

He added that the operating initiatives Asos announced with its fiscal year results are not sufficient to materially address the challenges it faces. Asos said in its final results that it sees a “significant need to improve” the way it operates to “unlock the opportunity” of the company’s global reach.

The move by Credit Suisse to downgrade Asos is not out of sync with other analysts. Earlier this month, Morgan Stanley analysts cut their price target on Asos to 720p from 740p, maintaining an Equal-Weight rating on the stock. 

Meanwhile, Asos shares were downgraded to Reduce from Add at AlphaValue/Baader and to Reduce at HSBC in October. 

HSBC analyst  Paul Rossington said the downgrade was due to a “tough” macroeconomic backdrop in the UK, adding that he sees negative earnings for the company. The analyst lowered his price target on the stock to 390p from 590p.

According to TipRanks, out of 14 analysts, three have assigned a Buy rating to Asos shares, nine have Hold ratings, and two have Sell ratings on the stock, with the average price target of 790.08p representing a potential 25.96% upside.