Size of the text
Getty Images/China Photos
Stocks of
Burberry
In London trade on Friday, they were up following a week of declines.
Goldman Sachs is a financial services firm.
suggested that ahead of the company’s fiscal first quarter, the luxury goods maker deserved more investor attention. Burberry (ticker: BRBY.UK and BURBY) analyst Louise Singlehurst upgraded her rating to Buy from Neutral, lifting her target price to 2,475 pence ($34.29) from 2,135p. She claims that, while Burberry’s stock has underperformed luxury peers in recent years, the company’s transformational improvements are expected to reverse that trend.
According to Singlehurst, “the brand has been undergoing major restructuring in order to elevate its posture towards a more premium offer,” which includes limiting markdowns and reducing distribution to wholesalers. With the announcement late last month that the company’s CEO would be stepping down, she adds that “Burberry is nearing the end of its reset.” The company’s expectations aren’t high. Burberry is set to release its fiscal first-quarter earnings on July 16, and Singlehurst believes sales will exceed expectations. She raised her sales forecasts for fiscal 2023 and fiscal 2024 by 5% and 7%, respectively. In the end, she feels that “if Burberry is able to deliver on its medium-term aim of high-single digit annual sales growth, it can produce considerable additional shareholder returns.” After boosting its full-year outlook in March, the business resumed its dividend in May. Nonetheless, Burberry is still trading at 13 times her predicted 2022 adjusted enterprise value to earnings before interest and taxes, according to Singlehurst, which she considers an unjustified discount to rivals. In recent trade, Burberry stock was up 3% to 2,046p, after rising 14 percent year to date and 32 percent in the previous year. Over-the-counter shares in the United States are up 3.5 percent to $28.36. Teresa Rivas may be reached at teresa.rivas@barrons.com./n
Read More
