Ermenegildo Zegna downgraded to Neutral from Buy at BofA

BofA downgraded Ermenegildo Zegna to Neutral from Buy with a price target of $9.80, down from $13. The firm does not believe luxury stocks will trade at fair value in the near term given weak revenue and earnings momentum. “Muted” luxury sector revenue growth will likely continue into 2025, leading to margin pressure and earnings risk, the analyst tells investors in a research note. BofA says the recent deterioration of sector growth has been the Chinese consumer, which was also flagged by Zegna during its Q2 results call last week. It believes the slowdown in sector revenues are cyclical, not structural, and driven primarily by synchronized consumption weakness across US, Europe and China.