Analysts Are More Bearish On ASOS Plc (LON:ASC) Than They Used To Be

Today is shaping up negative for ASOS Plc (LON:ASC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 5.6% to UK£3.61 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the 15 analysts covering ASOS provided consensus estimates of UK£2.8b revenue in 2025, which would reflect a measurable 4.3% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 76% to UK£0.69 per share. Yet before this consensus update, the analysts had been forecasting revenues of UK£2.8b and losses of UK£0.56 per share in 2025. So it's pretty clear the analysts have mixed opinions on ASOS even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

Check out our latest analysis for ASOS

The consensus price target fell 10% to UK£4.25 per share, with the analysts clearly concerned by ballooning losses.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.3% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 1.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.3% annually for the foreseeable future. It's pretty clear that ASOS' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data indicates that ASOS' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Worse, ASOS is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

You can also see our analysis of ASOS' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.