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.”
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%.
