Shares in Burberry (LON:BRBY) have fallen deep into the red in today’s session, as Goldman Sachs lowered its stance on the luxury goods retailer. Proactive Investors quoted the analysts as pointing to the group’s demanding valuation and expectations for higher investment to stimulate sales growth.
As of 13:38 GMT, Burberry’s share price had lost 3.02 percent to 1,894.50p, underperforming the benchmark FTSE 100 which has climbed marginally into positive territory and currently stands 0.22 percent higher at 7,199.30 points. The group’s shares have added more than 15 percent to their value over the past year, as compared with about a 0.5-percent gain in the Footsie.
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Goldman Sachs turns bearish on Burberry
Goldman Sachs lowered its stance on Burberry from ‘neutral’ to ‘sell’ today, trimming its price target on the shares from 2,148p to 1,855p. Proactive Investors quoted the analysts as saying in a note to clients that while they liked the long-term equity story at the luxury goods retailer, they expected that activity to reinvigorate sales momentum would encourage higher incremental investment near-term.
“With new product now entering stores, we see this as the time for Burberry to focus on capturing share in a competitive market,” the broker pointed out. Goldman Sachs trimmed its 2020 and 2021 earnings per share estimates for Burberry by 11 percent and 18 percent, respectively. While the analysts’ adjusted underlying earnings estimate for 2019 remains broadly unchanged at £435.5 million, it assumes a modest drop of around two percent in 2020.
Other analysts on luxury goods retailer
HSBC, which rate Burberry as a ‘hold,’ boosted its valuation on the shares from 1,950p to 2,000p last week. According to MarketBeat, the luxury goods retailer currently has a consensus ‘hold’ rating and an average price target of 1,926.43p.
Burberry updated investors on its third-quarter performance in January, posting a fall in revenue, while maintaining its full-year guidance as it continues with its transformation under chief executive Marco Gobbetti.
As of 14:18 GMT, Wednesday, 06 March, Burberry Group plc share price is 1,894.50p.