HSBC has lifted its rating on Burberry (LON:BRBY), arguing that the share price is now more realistic following a steep fall, Proactive Investors has reported. The comments come after RBC Capital Markets has removed the luxury goods retailer from its list of large-cap stocks it would sell short.
Burberry’s share price has been subdued in London in today’s session, having given up 0.84 percent to 1,703.00p as of 10:19 BST. The stock, however, is outperforming the broader market selloff which has seen the benchmark FTSE 100 dip 1.75 percent to 6,881.28 points. The group’s shares have lost more than 11 percent of their value over the past year, as compared with a near eight-percent fall in the Footsie.
HSBC lifts Burberry’s rating
HSBC raised its rating on Burberry from ‘reduce’ to ‘hold’ today, while trimming its price target on the shares from 2,100p to 1,950p. Proactive Investors reports that the analysts believe that the retailer’s decision to take the brand more upmarket is both ‘brave and risky’.
“The management’s vision and the new designer's credentials are worthy of enthusiasm and on the positive side, Chinese consumers seem to have a perception of the brand which is very positive, including in the all-important handbag category,” the broker elaborated. “On the flipside, we are also wary that there could be some hiccups along the way.”
The analysts also noted that with Burberry’s stock now 29 percent below its year high, they now believed that the shares were “reflective of a more realistic scenario”.
Other analysts on retailer
JPMorgan Chase & Co, which is ‘neutral’ on Burberry, lifted its price target on the stock from 1,710p to 1,850p yesterday. According to MarketBeat, the luxury goods retailer currently has a consensus ‘hold’ rating and an average price target of 2,015.81p.