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Broker tips: ASOS, Dechra Pharmaceuticals, Mediclinic
ASOS can quadruple revenue in the next decade, Goldman Sachs analysts said as the investment bank increased its share price target for the online fashion retailer.
Goldman analysts, led by Richard Edwards, set a new price target for ASOS shares of 7,300p - up from their previous target of 6,100p.
The analysts stuck with their 'neutral' rating for the stock. At 12:44 GMT ASOS shares were up 0.5% at 7,466p.
"The ASOS investment plans, which centre on fashion-right product, technology velocity, and customer enhancements (try before you buy, ASOS Instant, same-day delivery), are delivering impressive revenue progress ... and we expect this will continue across FY18. This rate of market share gain is consistent with our longer-term view that ASOS can increase revenue 4x by 2028," the analysts wrote in a note to clients.
Jefferies upgraded its stance on veterinary pharmaceutical company Dechra Pharmaceuticals to 'buy' from 'hold' and lifted the price target to 2,322p from 2,221p following the group's acquisition of Dutch firms AST Farma and Le Vet
The bank reckons these two deals give Dechra a springboard both to grow the pipeline and improve its reach into the EU. It said that despite the share price rally on the back of the deals, market consensus should still move higher when visibility improves on mid-term drivers.
Jefferies pointed out that as a result of the acquisitions, Dechra will gain access to a broad portfolio of over 90 products marketed in the Netherlands, 60 of which are sold in the EU. It will also gain 30 pipeline products.
UBS downgraded Mediclinic to 'neutral' from 'buy' as the risk-reward ratio "now looks more balanced" and the stock recovered from its low in November.
In late November, with the stock hitting an all-time low after falling more than a third since the start of 2017, the Swiss bank had lifted its rating on the stock as it felt structural and other challenges such as doctor numbers in UAE, tariffs and patient mix in Switzerland were baked in and "we thought an inflection point was near" and market expectations for long-term margins in Switzerland and Abu Dhabi were felt to have become overly cautious.
"We believe expectations for long-term margins now appear more reasonable/optimistic," UBS moved its rating back as it looked for "further evidence of operational delivery to turn more positive".
However, analysts increased their earnings per share estimates by around 4-6% due to forex adjustments and so hiked the price target to 650p from 600p.