RBC Capital Markets raises target price on Burberry
By Iain Gilbert
Date: Friday 18 Nov 2022
(Sharecast News) - Analysts at RBC Capital Markets raised their target price on fashion brand Burberry from 1,800.0p to 2,070.0p on Friday, citing the group's "sensible strategy".
RBC Capital said it viewed Burberry's revised strategy as "sensible" with key focus areas broadly in line with its expectations. Targets were also said to not be "hugely surprising".
"We have more belief in £4.0bn revenue target, and are less confident on EBIT margins significantly above 20%, particularly in the absence of any meaningful gross margin support," said RBC.
The Canadian bank, which reiterated its 'sector perform' rating on the stock, noted that it would prefer to wait and see the reaction of Daniel Lee's initial contribution in early 2023 and also profit and loss evolution, with a view to re-evaluating its thesis in the upcoming quarters.
"Burberry trades at 17x CY23E P/E, 10x EV/EBIT and 2.0x EV/ sales (vs sector ex Hermes on 20x, 12x and 3.1x). The stock offers valuation support, and with benefit of new leadership, creative director and strategy, we think the business could re-rate if successfully executed."
Reporting by Iain Gilbert at Sharecast.com
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