Deutsche Bank analyst Adam Cochrane adjusted the firm’s rating on various European retail stocks on Friday, cutting clothing company Asos, as well as Pets at Home and Kingfisher plc. 

2022 was a challenging year for retailers, with soaring inflation and supply chain issues causing havoc, but so far this year, things are looking up.

However, even though Cochrane believes the outlook for European retailers is getting “noticeably less chilly” and the firm now prefers clothing retailers over hardlines, he has downgraded Asos to Hold from Buy, raising the firm’s price target on the stock to 950p from 800p per share. 

In his note to clients, Cochrane stated the firm also prefers discounters and physical retail over online, providing some explanation for the Asos downgrade.

As a result, the analyst also changed the ratings and price targets on various other stocks: 

• Pets at Home Group was cut to Hold from Buy, with its price target lifted to 355p from 310p.
• Kingfisher was downgraded to Hold from Buy, with its price target cut to 260p from 275p.
• Inditex was lifted to Hold from Sell, with its price target raised to EUR 27 from EUR 23.
• B&M European Value Retail was upgraded to Buy from Hold with a price target of 580p, up from 460p.
• Marks & Spencer was raised to Buy from Hold, with its price target increased to 210p from 145p per share. 
• Boohoo’s price target was raised to 50p from 36p per share, with a Hold rating maintained. 

Cochrane said the firm now has a less bearish view and sees inflationary pressures resulting in selling costs becoming a tailwind in the second half of the year.