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Burberry Shares Fall as Jefferies Slashes Price Target
Global Markets

Burberry Shares Fall as Jefferies Slashes Price Target

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The luxury retailer Burberry’s shares traded down by over 2% yesterday after Jefferies reduced the price target for the company.

The UK-based Burberry Group PLC (GB:BRBY) share price declined by 3.03% on Tuesday after Jefferies trimmed its price target. Analyst James Grzinic from Jefferies slashed his price target from 1,800p to 1,600p, as he thinks that the company’s full-year guidance is “vulnerable.”

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Grzinic contended that the ongoing slowdown in the U.S., Europe, and China could obstruct the company from achieving its sales targets for the year. He also cautioned that the full-year outlook might be at risk unless the new products by designer Daniel Lee gain traction in early 2024.

Burberry Group is a global luxury brand specializing in the design and sale of clothing, footwear, and accessories across various markets.

Downturn in Luxury Spending Takes a Toll

The Jefferies price target cut comes a month after the company expressed uncertainty about meeting its annual revenue projection of low double-digit growth. The company now anticipates its annual adjusted operating profit to land at the lower end of the consensus range of £552 million to £668 million.

The company’s performance is hit by the downturn in overall luxury spending due to high inflation and cost-of-living pressures. Burberry reported a decline of 15% in its operating profit in its half-year results for FY24.

Recently, HSBC analyst Aurelie Husson-Dumoutier reduced the price target for Burberry stock from 2,200p to 1,750p, citing a gloomy outlook for the luxury goods sector. HSBC issued a cautionary statement, indicating the end of the era of “exceptional growth” in the luxury sector. The analyst noted that this growth, which was partly fuelled by the revenge buying post-pandemic, is coming to an end after three years.

What is the Share Price Forecast for Burberry?

Overall, Burberry’s stock has a mixed reaction from analysts. Goldman Sachs remains highly bullish on the stock and predicts an upside of almost 70%, while UBS has rated the stock a Sell.

On TipRanks, BRBY stock has received a Hold consensus rating, backed by a total of 14 recommendations from analysts. It includes two Buy, ten Hold, and two sell ratings. The Burberry share price target is 1,903.43p, which is 29% higher than the current trading level.

Year-to-date, the stock has traded down by 26%.

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