On Tuesday, Jefferies adjusted its stance on Burberry Group (OTC:BURBY) Plc (BRBY:LN) (OTC: BURBY), reducing the luxury fashion company's share price target to GBP12.00 from GBP13.00. Despite the change in the price target, the firm retained its Hold rating on the stock.
The adjustment by Jefferies comes in anticipation of Burberry's final financial results for the year, which are scheduled to be released on May 15. The analyst noted that the fashion industry has been facing challenges, particularly with the shifting fortunes of competitors like Gucci in the Chinese market, which may have set the stage for Burberry's mixed performance.
The firm has revised its full-year profit forecasts for Burberry to be 11% below the consensus estimates of other analysts. This revision reflects concerns about whether Burberry's corrective design actions, starting from the Autumn/Winter 2024 season, will bolster the company's performance in the face of an expected flat profit in the upcoming year.
Despite the reduced estimates, Jefferies suggests that Burberry's substantial equity base, approximately GBP4 billion, might provide some resilience to the company's share price against short-term earnings revisions. This implies that the financial foundation of the company could offer some protection against market reactions to changes in projected earnings.
InvestingPro Insights
As Burberry Group Plc (BRBY:LN) (OTC: BURBY) approaches its financial results announcement, InvestingPro data reveals a nuanced financial landscape. The company boasts a market capitalization of $5.45 billion and an attractive gross profit margin of 70.43% over the last twelve months as of Q2 2024, which speaks to the strength of its business model. Additionally, the P/E ratio stands at 9.98, suggesting that the stock may be reasonably valued given its earnings.
InvestingPro Tips highlight that Burberry has been actively engaging in share buybacks, which could signal management’s confidence in the company’s value and future. Moreover, the company pays a significant dividend to shareholders, with a high dividend yield of 6.44% as of the last recorded date, rewarding investors even as the company navigates through market challenges. These financial strategies could be integral to understanding Burberry's resilience in the face of industry headwinds and analyst concerns.
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