Goldman Sachs has lifted its stance on Burberry (LON:BRBY), with the group’s share price having failed to match the rises enjoyed by some of the retailer’s peers of late, Proactive Investors reports. The move comes after analysts at Bernstein recently lifted their rating on the company.
Burberry’s share price has surged in London this morning, having gained 1.72 percent to 1,894.00p as of 08:07 BST. The advance is largely in line with gains in the broader London market rally, with the benchmark FTSE 100 index currently standing 1.11 percent higher at 7,508.33 points. The group’s shares have given up just under 14 percent of their value over the past year, as compared with about a three-percent fall in the Footsie.
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Goldman Sachs lifts rating on retailer
Goldman Sachs lifted its rating on Burberry from ‘sell’ to ‘hold’ on Friday. Proactive Investors quoted the broker as commenting that over the past three months, the luxury goods retailer had underperformed the luxury peers by about 10 percent.
“This we believe reflects a lack of consensus earnings upgrades, despite a strong luxury environment, which has led to a re-rating of stocks such as LVMH, Kering, Hermes and Moncler,” the analysts continued, adding that their forecasts remained “below consensus as we expect Burberry will need to increase investments to drive an acceleration in brand momentum”.
“However, market expectations now seem to have lowered, we now see a favourable currency tailwind providing support to earnings in FY20, and Burberry now trades at a discount to peers,” the broker pointed out.
Target on Burberry share price trimmed
Goldman Sachs, however, lowered its valuation on the luxury goods retailer’s shares from 1,855p to 1,800p. Going forward, the broker said that it would be paying close attention to the success of new ranges by creative director Riccardo Tisci, online sales and marketing and investment costs.
According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating, while the average target on the Burberry share price stands at 1,905p.