Market Report: Shop talk gives Asos a higher price tag
Saturday 08 September 2012
Miles and miles of high streets lie empty as retailers struggle to stay afloat but City scribblers think online fashion site Asos should actually open some shops. David Reynolds, analyst at broker Jefferies, reckoned Asos should "do an Apple" and set up giant, shiny flagship shops to "redefine the retail experience and build the style element of the brand".
If Asos chooses to take this advice, it won't be the first to have moved from online into physical space. Ebay opened a pop-up – temporary – shop in London last year, and Amazon is setting up Amazon Lockers for customers to pick up their purchases. Mr Reynolds thinks Asos has built a competitive brand that "has cracked the staid, but fragmented fashion arena".
He rates what chief executive Nick Robertson and his team have done and said the fashion brand's influence is growing, particularly with the important heavyweights in the fashion world. Mr Reynolds gave the shares a price target of 2,199p. Investors took note and they strutted up 88p to 1,988p.
The FTSE 100 managed to hang on to gains after a very choppy day, moving up 17.46 points to 5794.8. The rule is don't wear white after Labor Day, but traders were left waving the white flag when shock US employment figures emerged at lunchtime. Dealers were left reeling at their desks when August's employment stats – the non-farm payroll rise – turned out to be well below the expected 125,000, at just 96,000.
What had been an optimistic mood across trading floors following Thursday's ECB bond-buying plan quickly turned to melancholy. But the jobs stats make it much more likely the Federal Reserve will pump more money into the sluggish economy.
On the FTSE 100, miners remained popular as fears of the commodity boom coming to an end disappeared for now. Beijing stepped up infrastructure investment, and there are hopes that more measures to bolster growth will follow. The mining sector filled the top of the leaderboard. Evraz, Roman Abramovich's miner and steelmaker and Russia's largest steel producer, was top, up 33.7p to 260.4p.
In a dramatic 11th-hour rescue attempt of the proposed Glencore-Xstrata mega-merger, the commodities trader raised its offer for miner Xstrata. Glencore tumbled to the bottom of the FTSE 100, down 14.3p to 378.05p, while Xstrata moved up 35p to 1014p.
A note from analysts at Citi helped aerospace group Meggitt edge up 6.2p to 407.3p. Citi scribes said it would be ripe for mergers or could be a "potential acquisition candidate" itself.
Defensive stocks were still being shunned for riskier opportunities. Imperial Tobacco, down 82p to 2,262p, and British American Tobacco, off 63.5p at 3,173.5p, puffed toward the bottom.
Investors who have been dialling up Vodafone shares for their attractive dividends are starting to feel frustrated.
Like a caller stuck on hold, investors have been waiting for signs of dividend growth this year. Vodafone owns 45 per cent of the wireless mobile network joint venture Verizon Wireless. Partner, US-based Verizon, agreed to pay out a 3 per cent increase in its dividend on Thursday but made no mention of a dividend for the joint venture. Analysts at Jefferies put Vodafone on hold in June and reiterated their concerns on its growth yesterday.
They said: "Dividend yield is fundamental to Vodafone's defensive attractions. But even if the Verizon Wireless dividend payable next January were to rise above $10bn, we believe that Vodafone would still choose to pass on to shareholders less than last year's 4p special dividend."
Jefferies issued a share price target of 180p. The shares posted a drop of 1.9p to 177.1p.
Risk seekers on the FTSE 250 helped boost Ukrainian iron ore miner Ferrexpo 28.1p to 182.8p.
Traders still had it in them for a bit of gossip, with bets on again for online gaming group 888 Holdings. The rumours have been around before but some think a bidder could have the betting website on its radar. The shares rose 5.25p to 92.25p.
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