HSBC downgrades Burberry after solid run
HSBC downgraded Burberry to ‘hold’ from ‘buy’ on Wednesday and cut the target price to 2,350p from 2,400p, saying it’s time to take a breather after a solid run.
Burberry Group
1,147.00p
14:05 25/04/24
CAC 40
7,985.36
14:05 25/04/24
Cboe CH 20
1,177.07
14:14 25/04/24
Cboe Europe All Companies
50.97
11:45 01/12/20
Cboe Europe All Companies ex UK
20,067.64
11:45 01/12/20
Cboe Europe Consumer Cyclicals Sector
28,481.34
11:45 01/12/20
Cie Financiere Richemont Sa
Fr.126.50
14:15 25/04/24
DJ EURO STOXX 50
4,989.88
00:00 25/04/24
FTSE 100
8,064.60
14:05 25/04/24
FTSE 350
4,428.95
14:05 25/04/24
FTSE All-Share
4,382.98
14:05 25/04/24
Kering
€326.39
14:05 25/04/24
Personal Goods
15,975.76
14:04 25/04/24
The bank argued that the upcoming growth pickup and margin improvement beyond 2022 is well reflected after the recent re-rating.
"We believe Burberry is now well positioned to deliver on its mid-term plan of sales up by high single digits, implying an outperformance versus the luxury industry," HSBC said. However, it pointed out the shares have risen 12% since the release of full-year earnings on 13 May and 24% year-to-date.
The stock is now just 3% below its pre Covid-19 peak of 2,329p reached on 17 January 2020.
"We believe the stock price already factors some upcoming positive catalysts such as the expected release of strong retail like-for-like in Q1 due on 16 July, which we forecast up 74% y-o-y or down 4% on a two-year stack, or broadly flat on a two-year stack excluding the high single-digit negative impact from the ongoing cut in mark-downs," HSBC said.
In the same note, HSBC downgraded Kering and Richemont to ‘hold’ from ‘buy’, while Hermes was cut to ‘reduce’ from ‘hold’.