Burberry Momentum Should Improve, Says HSBC

Burberry (LON: BRBY) shares traded higher on Tuesday after an upgrade by investment back HSBC…

The firm lifted the luxury fashion house to Hold from reduce, with an unchanged price target of 2,200p per share in a note to clients.

Burberry shares gained 1.7% in the session, closing at 2,208p per share. While the stock is up around 8% year-to-date and 27% in the last 12 months, it has dropped over 14% over the last month. 

However, HSBC believes Burberry’s valuation is now in-line with the average of its luxury and outlet-heavy competitors.

The investment bank’s analysts told investors they believe Burberry’s momentum in the coming quarters should improve due to easy compares and new designer-driven “brand heat.”

Despite the uncertain macroeconomic environment for the last year or so, Burberry has remained resilient as its consumers are less impacted by surging inflation. 

According to Semrush data, visits to the brand’s website continued to climb until around January this year. However, they have stalled and dipped slightly since then, suggesting the tailwind Burberry experienced from the China re-opening may be beginning to ease.  

MoPh Markets tracking of Burberry mentions on Twitter, which is also a sign of rising or declining demand, has dipped in the last couple of weeks.

By Sam Boughedda