UBS has lifted its valuation on Burberry (LON:BRBY), seeing a “potential long term improvement story,” WebFG News reports. The analysts, however, remain ‘neutral’ on the luxury goods retailer as they await more evidence to justify a premium share price.
Burberry’s share price has advanced in London in today’s session, having added 1.28 percent to 2,132.00p as of 13:02 BST. The advance is largely in line with the broader UK market, with the benchmark FTSE 100 index having climbed 1.30 percent to 7,654.86 points so far today. The retailer’s shares have added a little over a fifth to their value over the past year, as compared with a near three-percent gain in the Footsie.
UBS lifts valuation on Burberry
UBS lifted its price target on Burberry from 1,900p to 2,150p today, while maintaining its ‘hold’ rating on the shares. WebFG News reports that the analysts note that over history, the retailer’s valuation has been correlated to retail organic sales growth and at the current level, they believe that “the stock requires an acceleration in Q1 retail like-for-like to sustain its multiple despite excitement building ahead of the new creative director’s first show in September”.
UBS now forecasts four-percent like-for-like sales growth for the first quarter of the new financial year, with Burberry having ended the last financial year with quarterly growth of two percent. With the current p/e rating suggesting, however, that ‘much is already priced in,’ the analysts sit back ‘waiting for better evidence of a recovery’.
Other analysts on blue-chip retailer
Berenberg Bank reaffirmed its ‘buy’ stance on Burberry earlier this month, valuing the shares at 2,100p. According to MarketBeat, the blue-chip retailer currently has a consensus ‘hold’ rating and an average price target of 1,749.82p.