Jefferies has initiated its coverage of internet retailing giant ASOS with a 'buy' rating and 2,199p target price.

The broker celebrates an "innovative" management team which launched "disruptive" model to break into a relatively subdued UK retail market, building a robust brand over the last decade, creating a +£1bn company which has expanded internationally.

In a research report titled 'Build a brand and they will come!', the broker said that its investment thesis rests on three key ideas: "ASOS is a dynamic disruptor in a surprisingly staid industry, the business model defines operational leverage and delivers strong RoIC [return on invested capital] and lastly, our proprietary brand analysis indicates real competitive advantage."

Jefferies says that ASOS has built a competitive UK brand that has "cracked the staid, but fragmented" fashion retail industry: "Their share of influence is growing, more so among the key influencers; in fashion, that's gold dust."

By 11:36 on Friday, shares were trading 4.05% higher at 1,977p.

BC

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