Shares in ASOS (ASOS.L) shed 3 percent after KBC Peel Hunt downgrades its rating on the online fashion retailer to "sell" from "hold", on valuation grounds.

Asos.com

"The company remains a high-growth global business driven by a strong and effective management team. However, as the shares already fully price in management's 2015 one billion pounds sales target, we see risks to the downside," KBC Peel Hunt says in a note.

The broker says ASOS trades on a 2011 estimated annualised price-to-earnings ratio of 45 times and EV/EBITDA of 25.3 times.

"Unless investors are confident in either the argument for ASOS as an acquisition target or our two billion pounds plus "what if" sales model (turnover of 1.5 billion pounds by 2015 and 2.6 billion pounds by 2020), then we believe the shares are overvalued."