RBC Capital hikes Burberry price target after Q3 update
By Michele Maatouk
Date: Tuesday 28 Jan 2025
(Sharecast News) - RBC Capital Markets lifted its price target on Burberry on Tuesday to 1,300p from 1,000p as it upped estimates after the third-quarter trading update.
The bank said Burberry delivered a strong trading statement, with a significant acceleration in revenue growth, and well ahead of expectations.
RBC said stronger-than-expected 3Q25 revenue trends with broad-based acceleration across regions underpinned by scarves and outerwear is the first step in the right direction.
"Chinese cluster momentum cadence may be beneficial for Burberry, and markdown contribution is limited to low single digit percentage in 3Q25," it said.
"We believe Burberry is pursuing the right strategy, with important recent key hires (marketing, merchandising), which over time should drive better execution."
RBC upped its revenue estimates by 4% across FY25-27, driven by slightly higher underlying assumptions, positive FX translation impact and slightly higher gross margins. This results in a revised EBIT estimate of £6m versus a previous estimate for a £30m loss.
RBC rates Burberry at 'outperform' and also assigns a 'Speculative Risk' qualifier on the basis that it is potentially an acquisition target for Moncler or other industry players.
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