Burberry (LON: BRBY) shares dipped on Monday after the stock was downgraded by analysts at UBS. 

A note from UBS analyst Zuzanna Pusz revealed the investment bank was cutting the rating of BRBY to Sell from Neutral with a new price target of 1,614p, down from 2,285p per share. 

Pusz told investors in a research memo that the firm has so far seen a “muted reaction” to the luxury fashion brand’s latest collection while they also see an “increasingly challenging sector context.”

As a result, it puts the company’s turnaround at risk, the analyst explained. 

Burberry shares dipped around 0.8% during Monday’s session, meaning the stock is now down over 7% in 2023. So far in Tuesday’s session, it has declined more than 2%.

Analysts’ view of the luxury sector has skewed negatively in recent weeks. Last week, Morgan Stanley analysts issued a warning regarding a possible demand slowdown for high-end handbags and jewelry in China and Europe.

Jefferies analyst James Grzinic, who recently re-initiated coverage of Burberry with a Hold rating and price target of 2,200p, struck a very similar tone, stating demand risks in the US and Europe remain unclear, while lack of Chinese aspirational spend recovery “frustrates.” 

Meanwhile, BofA said there is a new normal for the luxury goods sector.

Despite the cautionary notes, Burberry online consumer trend data remains resilient, with web traffic currently just below all-time highs following a dip earlier in the year. Google searches have also been stable, with Trends data showing a 1% decline year-over-year.

By James Fyeman