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Can ASOS fill the gap back to £45?

The online clothing retailer's shares have continued to make steady progress since last October’s lows.       

ASOS packages
Source: Bloomberg

On Thursday 12 March ASOS is due to post its second-quarter figures and the focus for the company will be on sales. The market expectation is for it to continue in the right direction. Last quarter saw the company hit £246.329 million in sales and this is called to increase to £287 million. Considering the second-quarter sales figures last year were £139.159 million this represents sizeable progress.

The institutional outlook for the company still remains resilient regardless of some of the issues the firm has had to tackle in the last 12 months. Currently there are 13 firms with a buy recommendation, nine with a hold and eight with a sell. The average 12-month price target for the company is £29.65 and the current share price is already 10% above this level.

ASOS found 2014 a very difficult year as it struggled with currency exposure-denting figures. The company’s Barnsley warehouse suffered major damage from a fire as almost 20% of the stock on the premises was ruined. While the company was up and running 48 hours later, offering discounted sales, the whole event will have cost the company around £30 million in lost revenue and disruption.

The CEO of ASOS, Nick Robertson, has sold a £20 million stake in the business after a difficult year in his personal life which is likely to have more to do with this decision than the current state of the business.

On the back of last year’s fire the shares dropped from £46. The current level just below £34 will be a difficult hurdle to clear as the stock tries to fill the gap after this disaster. The trend higher is strong and the moving averages are all supportive while the shares are yet to reach over bought territory.

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