Broker tips: Asos, Hargreaves Lansdown

(Sharecast News) - Analysts at Berenberg slashed their target price on clothing retailer Asos from 1,800.0p to 1,200.0p on Tuesday following the group's full-year earnings. Berenberg said there were few surprises in Asos' full-year numbers given its post-year-end trading update. However, new chief executive José Antonio Ramos Calamonte's "frank assessment" of the current shortcomings of the business highlighted a number of issues, as well as reasons for medium-term optimism.

"The CEO has a clearly defined set of near-term priorities with the aim of enhancing the customer offer and inventory management, improving order economics and streamlining the cost base, maintaining a robust balance sheet, and refreshing the leadership team and culture," said Berenberg.

The German bank noted that a comprehensive review of the company's model had "inevitably" left some short-term unknowns, but a key positive was increased confidence in Asos' balance sheet position.

"On our revised estimates, ASOS trades on 0.3x CY23 EV/sales and 17x P/E," said the analysts, who reiterated their 'buy' rating on the stock.

Analysts at Canaccord Genuity upgraded financial services firm Hargreaves Lansdown from 'hold' to 'buy' on Tuesday, stating an "almost" perfect storm had created a "buying opportunity".

Canaccord Genuity said that since announcing "a major investment project" at its Capital Markets Day on 22 February, Hargreaves Lansdown's shares were down 43%.

"Investor surprise at the scale of the £175.0m, five-year project, coupled with a wider market sell-off, have seen the shares trading at their lowest level since January 2013," said the analysts.

Canaccord does not believe that some targets set at the CMD will be achieved - namely an increase in net new business to high-single digits, net new business hitting £20.0bn in 2026 and HL's client base growing to roughly 2.6m by 2026.

However, the Canadian bank said return on equity was still "very high" at more than 40%, and, given the high retention rate of clients and assets, the shares should offer "attractive compounding characteristics" over the medium-to-long term.

"In summary, HL faces challenges, but we believe the stock has been oversold and now offers an opportunity for investors to build a stake in a strategically important, high quality, high return, highly cash generative business."

Canaccord also lowered its target price on the stock from 1,695.0p to 1,148.0p.