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Trending tickers: Asos | Rio Tinto | Marvell | Costco

The latest investor updates on stocks that are trending on Friday

LOS ANGELES, CALIFORNIA - FEBRUARY 18: Samantha Lillian during the ASOS | Nordstrom Pop-Up at Nordstrom at the Grove on February 18, 2022 in Los Angeles, California. (Photo by Gonzalo Marroquin/Getty Images for Nordstrom and ASOS)
Investors are questioning if Asos fundraise be enough. Photo: Gonzalo Marroquin/Getty for Nordstrom and ASOS (Gonzalo Marroquin via Getty Images)

Asos (ASC.L)

Asos shares fell after initially jumping 9% on Friday after the online fashion retailer announced plans to boost its balance sheet through a new long-term £275m ($339.9m) financing facility alongside a £75m placing as it continues to restructure the business.

Existing shareholders Aktieselskabet and Camelot Capital Partners participated in the capital increase, Asos revealed.

Chief executive Jose Antonio Ramos Calamonte is seeking to convince investors that his plan will return the business to profit.

However, AJ Bell investment director Russ Mould said: “The key question for ASOS is: will raising £80m by issuing new shares and refinancing its debt really cut it?

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Read more: FTSE 100 higher as UK retail sales improve

“The fast fashion online retailer hopes this can create a solid base for the company’s recovery.

“However, with the company paying high rates of interest on its newly agreed debt, much of the money raised from shareholders will almost immediately be going out the door on servicing its borrowings.”

Like other online-only retailers, Asos has been hit hard by rising return rates.

Rio Tinto (RIO.L)

Rio Tinto jumped after being upgraded to Overweight from Equal Weight by Morgan Stanley (MS).

Consultancy firm Jefferies also turned bullish on the miner, saying Rio Tinto offered "compelling" opportunity for the long term.

“Chinese demand weakness is a near-term risk and valuation alone is not a catalyst for mining share prices to go higher.

“But our analysis indicates that shares of Rio, BHP (BHP.L), and Vale (VALE) are trading at compelling levels now,” it said.

Markets currently are pricing in a benchmark iron ore price of $81.37/t.

However, investors should be aware that Rio Tinto’s stock has declined 18% over the past three months

Marvell (MRVL)

Chipmaker Marvell's shares surged by almost 20% in post-bell trading after the semiconductor producer beat analysts’ expectations for its first quarter.

Read more: Stocks that are trending today

The semiconductor firm reported adjusted earnings per share of 31 cents for the April quarter, compared with the consensus estimate of 29 cents among Wall Street analysts.

Revenue came in at $1.32bn, which was above analysts’ expectations of $1.3bn.

“AI has emerged as a key growth driver for Marvell, which we are enabling with our leading network connectivity products and emerging cloud optimized silicon platform,” Marvell CEO Matt Murphy said in the release.

“While we are still in the early stages of our AI ramp, we are forecasting our AI revenue in fiscal 2024 to at least double from the prior year and continue to grow rapidly in the coming years.”

Read more: My first boss: Tony Craddock, Payments Association director general

The company — which sells a range of chips and hardware products for data centres, 5G infrastructure, networking, and storage markets — also said revenue growth should accelerate in the second half of the fiscal year.

Costco (COST)

Shares slipped 0.2% after the retailer posted a miss on revenue, recording $53.65bn for its fiscal third quarter while analysts forecast $54.57bn.

Costco registered an operating income of $4.79bn during the quarter, an increase from $4.45bn in the same period a year ago.

Net income attributable to Costco was $1.3bn in Q3 FY23, down from $1.35bn in the same quarter the previous year.

With consumers prioritising their spending on essential items, including packaged food and groceries, one-stop retailers such as Costco are grappling with a drop in demand for high-margin products such as home furnishings, jewellery, toys and electronics.

"Costco's solid value proposition and loyal customer base were not enough to capitalise on economic fears, even with their well-priced mix of name brands and in-house Kirkland labelled products," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

Costco reported a quarterly profit of $2.93 per share, missing analysts' expectations of $3.29.

Watch: Debt deal, Nvidia stock soars, Costco earnings: Top stories

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