Broker tips: Crest Nicholson, Asos
By Digital Look
Date: Friday 21 Mar 2025
(Sharecast News) - RBC Capital Markets upgraded Crest Nicholson on Friday to 'outperform' from 'sector perform' and hiked the price target to 230p from 180p after the housebuilder's capital markets day on Thursday.
"Crest Nicholson's new chief executive has a plan," the bank said.
"He has cast his eye over the group and, perhaps in homage to the late great Eric Morecambe, has concluded that Crest has all the pieces it needs for success, but has been playing them in the wrong order.
"The group now has a chance to return to growth in volumes, margins and returns. With its operational issues now largely behind it, the future has got brighter."
RBC said that by FY2029, it believes Crest could look like "the Redrow of the South".
Shore Capital has upgraded ASOS from 'hold' to 'buy' after first-half earnings came in ahead of forecasts on Friday.
The broker said it sees a "better entry point" for investors with the stock having fallen to its 2008 lows, trading at an enterprise-value-to-EBITDA ratio of just 4x, compared with a peer average multiple of 12x.
ASOS said that EBITDA for the six months to 3 March would be ahead of the £34m consensus estimate due to strong gross margin development, driven by lower markdown activity and increased full-price mix, and continued cost discipline.
"Improving profitability has been a key focus for the group, with successful efforts made to reduce inventory levels and allow ASOS to operate from a more agile business model. Note Test & React now makes up more than 15% of own-brand sales and is said to be growing," Shore Capital said in a research note.
Nevertheless, the broker said it continues to be "concerned" about top-line headwinds, and so will be watching key customer metrics closely when interim results are announced on 24 April.
"Whilst we continue to state some caution relating to market pressures and customer trends, the recent balance sheet actions and progress the group has made to support profits are encouraging," Shore Capital said.
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