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Dec. 17, 2018, 3:17 p.m. EST

Asos shares sink after sales growth guidance slashed but Wells Fargo analysts remain confident

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By Tonya Garcia

Shares of U.K. e-commerce retailer Asos PLC /zigman2/quotes/209092221/delayed UK:ASC +4.60% closed down 37.6% on Monday after the company guided for a sales deceleration, but Wells Fargo analysts say they remain confident the company will reach its long-term goal of £2.5B in sales and 4% margins. Asos lowered its fiscal year guidance to 15% growth from 20% to 25% growth previously, saying November fell below expectations. "The current backdrop of economic uncertainty across many of our major markets together with a weakening consumer confidence has led to the weakest growth in online clothing sales in recent years," the company said in a statement. However, Wells Fargo analysts note that competing Boohoo Group PLC /zigman2/quotes/205655689/delayed UK:BOO +2.74% "came out well this [morning] and stated that they are 'comfortably in line with market expectations' following a strong trading through Black Friday." Wells Fargo slashed Asos' price target to p3400, or £34, from p9600, or £96, previously. Analysts maintained their outperform stock rating saying they don't see any fundamental issues with the company. "We continue to believe that the company's flexible model and prudent management can weather this disappointing season," the note said. "[H]owever, with the macro worsening in Europe, tech valuation compressing and now company credibility low - we think this now puts Asos into the 'penalty box' for the time being." Asos shares have sunk 61% in 2018 while the Amplify Online Retail ETF /zigman2/quotes/206522380/composite IBUY +4.43% has fallen 0.1% and the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.49% is down 4.6% for the period.

/zigman2/quotes/209092221/delayed
UK : U.K.: London
4,960.00 p
+218.00 +4.60%
Volume: 302,480
May 14, 2021 4:35p
P/E Ratio
27.55
Dividend Yield
N/A
Market Cap
£4.94 billion
Rev. per Employee
N/A
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/zigman2/quotes/205655689/delayed
UK : U.K.: London
318.60 p
+8.50 +2.74%
Volume: 3.29M
May 14, 2021 4:35p
P/E Ratio
44.01
Dividend Yield
N/A
Market Cap
£3.85 billion
Rev. per Employee
N/A
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/zigman2/quotes/206522380/composite
US : U.S.: NYSE Arca
$ 112.60
+4.78 +4.43%
Volume: 143,229
May 14, 2021 4:10p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,173.85
+61.35 +1.49%
Volume: 1.91B
May 14, 2021 5:02p
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