Berenberg has lowered its rating on Burberry (LON:BRBY), arguing that growth prospects for the blue-chip group and other luxury stocks face “undoubtedly more downside than upside risk,” WebFG News has reported. The comments come as the FTSE 100 company prepares to update investors on its third-quarter performance on January 23.
Burberry’s share price has climbed higher in London in today’s session, having gained 0.77 percent to 1,755.50p as of 11:00 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.08 percent higher at 6,948.54 points. The group’s shares have been little changed over the past year, as compared with about a 10.3-percent dip in the Footsie.
Berenberg lowers rating on Burberry
Berenberg Bank lowered its rating on Burberry from ‘buy’ to ‘hold’ this week, trimming its price target on the shares from 2,270p to 1,920p. WebFG News quoted the analysts as saying that they felt that the luxury goods sector was ‘structurally better positioned’ than it was at the time of the 2012 downturn.
“The underlying drivers of luxury consumption in China, such as middle-class and millennial consumers, are healthier, allowing for long-term sustainable mid-single-digit growth as the sector enters a period of normalisation in demand,” the broker explained, adding, however, that “aware of the current external environment, we believe that, in the near term, volatility is likely to persist and a continued market sell-off creates obvious macro-related risks”.
Other analysts on FTSE 100 retailer
Deutsche Bank reaffirmed Burberry as a ‘hold’ today, without specifying a price target on the shares, while earlier this week, UBS, which rates the group as a ‘neutral,’ lowered its valuation on the stock from 2,000p to 1,900p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,949.44p.