ASOS’ stock is still slipping

ASOS will report its full-year numbers on 20 October and will need to tap into the EU if it wants to prevent its share price from sliding. 

Source: Bloomberg

ASOS’ share price has been sliding in the second-half of 2015. The online fashion house registered a double-digit growth rate in sales for the first-half of the year, but profits declined slightly as the cost associated with the warehouse fire last year and the upgrade to the IT systems took its toll. 

However, the firm has received compensation for the damages and that should be the end of that chapter.

The group posted a 14% rise in revenue and the UK was by far the biggest earner, with sales rising by 27%. ASOS is still working on a warehouse in Germany which will act as a hub for continental Europe, and the aim is to increase capacity by 40% in the region.

Successful expansion across mainland Europe will be the key to its success in the medium-term.

When ASOS reveals its full-year figures, traders are expecting revenue of £1.16 billion and adjusted net income of £37.33 million. These forecasts represent a 19% rise in revenue and 2% increase in adjusted net income.

The firm will also announce its second-half figures on the same date, and dealers are anticipating revenue of £617 million and net income of £29 million, which compares with the first-half revenue and adjusted net income of £550 million and £8.33 million respectively.

Equity analyst are bullish on ASOS and out of the 26 ratings, 13 are buys, six are holds, and seven are sells. The average price target is £39.63, which is 31% above the current price.

ASOS’ shares price has dropped considerably since February 2014, and as the rally in June of this year failed to take out April's high I feel the downward trend will continue, and a fallback to the £25 region is likely. 

The stock has been pushing up since late September, and any moves higher will encounter resistance in the £35 area.  

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