After the recent gloomy trading statement from fashion retailer Next, ASOS shareholders might be a bit apprehensive ahead of the online clothes seller's interim management statement on Wednesday, but Panmure Gordon says not to worry.
The broker recently raised its price target for the stock from 2179p to 2378p ahead of the trading statement, which will cover the three months to the end of August, the group's new fourth quarter (Q4) following its year-end change.
"This quarter offers a very easy comparable for the UK, which is still ASOS's single most important market, representing 39% of retail sales in the nine months reported to date," Panmure Gordon notes.
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"Most recent UK online clothing sector trends are strong and we expect only a small currency related slowdown in the international sales growth run rate vs. Q3's +54%. We think that the company can report Q4 sales growth of 35.0% (consensus +30%), to £145.1m (+17.0% UK and +47.3% international)," the broker said.
Peel Hunt, meanwhile, predicts UK sales growth of 12% year-on-year (yoy). "Most new season ranges are now priced more aggressively yoy," the broker observed.
It has also raised its target price, to 2100p, but in view of the strong share price performance of the stock it has cut its rating to "hold" from "buy".
"We look for international growth of +44.9%, with ROW [rest of world] +60%, EU +20% and US +65%. We expect territories with own-country web sites to be outperforming and look for updates on the development of own country teams, particularly in the US," Peel Hunt's John Stevenson said.
Seymour Pierce believes the ASOS update is likely to be better than expected, particularly in the UK following a streamlining of the ranges and further investment in price competitiveness.
"We are expecting total sales growth +30% in the August quarter with UK +7% and International +50%, similar to the quarter trend (ended June). However, profits growth over the medium term is likely to be checked by an eventual move to global free shipping for deliveries and returns and the cost of establishing a local infrastructure in core developing markets, such as in Australia," the broker said.
Hot on the heels of cracking results from Galliford Try comes an update from sector peer Redrow, which is currently the subject of an informal takeover approach from its Chairman Steve Morgan.
The market expects the house builder to deliver profit before tax of £36.82m on revenue of £439.9m. Earnings per share (EPS) are seen surging to 8.40p from 5.23p last year.
The group said it would return to paying dividends when it has reached an appropriate level of earnings, and that moment is close at hand, the market believes, with the consensus view being that a final dividend of 0.41p will be declared.
Panmure Gordon is not among those which thinks dividends will be resumed this year. It expects the group to announce "the completion of 2,449 homes during the year (-6.7%) at an average selling price of £181,800 (+10.3% YOY).
"Net margins are likely to have continued to increase to 9.3% (+240bps [2.4 percentage points]) as the group works new land into the system," the broker continued.
Panmure Gordon is marginally ahead of consensus with its forecasts of profit before tax of £36.9m and EPS of 9.0p, while it has pencilled in a net asset value (NAV) per share figure of 152p.
"In our view, the focus of Redrow's results will be whether Bridgemere and Tosca confirm its 152p offer and whether the board accepts or rejects this offer. The offer represents 1x June 2012E NAV and if formalised, with the potential concert party owning over 54% of the share capital already, it is likely to go through in our opinion," Panmure Gordon predicted.
Commercial vehicle hiring firm Northgate has enjoyed a good run since it resumed dividend payments, back in June.
Peel Hunt thinks the focus of Wednesday's results will be on the movements in fleet positions and hire rates.
In the UK, which accounts for 70% of earnings before interest, tax and amortisation (EBITA), "the closing fleet position was 52,900 and we expect slight slippage over the summer. Utilisation and hire rates should be broadly stable. We sense residual strength may surprise on the upside (again)," the broker said.
"In Spain (30% EBITA) we look for a slight reduction over the summer (closing
38,400) but utilisation and hire rates should show continued resilience. The
migration to non construction markets (with better cash dynamics and debtor
profile) remains an important part of the investment case," Peel Hunt reckons.
The Bank of England releases the minutes from the September meeting of the Monetary Policy Committee (MPC), but Credit Suisse seems to think they might well be a photocopy of the August minutes.
Barclays shows a bit more interest in the wranglings of the MPC, saying the minutes will "shed more light on the discussion on the necessity of further [quantitative] easing."
Barclays thinks the votes on the bank rate and asset purchases will prove to have been unanimous.
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