Investing.com -- TD Cowen analysts revealed Tuesday that they have added Richemont (SIX:CFR) to their Europe Best Idea List, citing supply chain agility, strong jewelry brand positioning, and growing investor interest as key factors supporting long-term growth.
“We believe Richemont is leveraging investments previously made in supply chain to bring greater speed and innovation into the organization,” said the bank.
The firm maintained a price target of CHF 210, based on a 28x multiple of FY27 EPS estimates, and sees further upside potential if Q4 sales remain resilient.
Richemont’s Cartier and Van Cleef & Arpels brands, which account for ~70% of sales, are seen as well-positioned to gain market share due to improvements in supply chain speed and innovation.
TD Cowen believes Richemont is benefiting from a shift in consumer spending from handbags to hard luxury, such as gold jewelry, due to its intrinsic value.
“We model +7% organic growth next year against +5% this year, which includes a +3% increase in APAC vs +10% in Americas,” said TD Cowen. “Note, we estimate the company can achieve operating margin leverage on +MSD% sales growth.”
TD Cowen also highlights Richemont as the best pure-play jewelry stock, with long-term investors showing greater interest.
They explain that the stock’s correlation to gold prices has risen to 0.8 over the last six months from 0.6 over the past five years, reflecting its status as a defensive asset.
Additionally, the firm says U.S. household net worth has a 0.96 correlation with global luxury spending, further reinforcing the company’s resilience.
Richemont is expanding in the U.S. market, with new stores in Texas and Illinois. The company’s watches segment is improving, with sales rebounding from -19% in Q2 to -8% in Q3.
TD Cowen expects margin expansion to 23.2% in FY26, still below the FY23 peak of 25.2%, leaving room for further growth.