Burberry share price jumps on upbeat peer forecast and bid speculation
Burberry’s (LON:BRBY) share price rose more than four percent this morning, underpinned by takeover bid chatter and an upbeat earning forecast from fellow luxury brand Mulberry (LON:MUL).
Burberry’s smaller rival said today that it expected its full-year profits to exceed estimates amid improving retail demand. “The encouraging retail trends over the last five months reflect our reinvigorated product offer and focus upon our customers,” Mulberry’ chairman, Godfrey Davis, stated.
The positive assessment of the sector comes ahead of Burberry’s second-half sales announcement next week. Investors expect the FTSE 100-listed company to follow suit in reporting an improved trading environment.
Apart from Mulberry’s upbeat statement and better sector outlook, traders have also been eyeing recent bid speculation. The Daily Mail today reported that Burberry could attract the attention of a US rival or cash-rich private equity groups. The fashion retailer makes Goldman Sachs’s list of “conviction buy” stocks that have an M&A probability of 30 percent or more.
Accelerated demand for Burberry’s shares pushed the luxury goods company to the top of the FTSE 100 leaderboard this morning. By 09:42 BST, the stock had gained 4.06 percent to 1,813.75p.
JPMorgan raised its price target on Burberry from 1,470p to 1,560p, citing a potential increase in the group’s earnings per share (EPS) due to weaker euro. The broker noted, however, that it expected Hong Kong and Macau — where luxury sales to Chinese tourists have fallen sharply in recent months — to remain tough markets for Burberry. JPMorgan’s view on the US and Europe was more optimistic.
As of 10:13 BST, Thursday, 09 April, Burberry Group plc share price is 1,812.00p.
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