On Monday, Stifel analysts upgraded Hermes International (OTC:HESAF) (RMS:FP) (OTC: HESAY (OTC:HESAY)) stock from a Hold to a Buy stance and increased the price target from EUR 2,150.00 to EUR 2,560.00. The adjustment reflects a positive outlook on the company's financial performance, with the firm's forecasts for the fiscal years 2025-26 EBIT (earnings before interest and taxes) being raised by 3%. These projections now stand 3-4% above the consensus estimates.
The luxury goods maker, currently valued at $246.34B, has demonstrated robust performance with revenue growth of 11% over the last twelve months. According to InvestingPro analysis, the stock is trading above its calculated Fair Value, reflecting high market expectations.
The upgrade by Stifel is based on several factors that are anticipated to contribute to Hermes International's continued success. The analysts expect the luxury goods company to maintain a significant growth differential when compared to its sector peers, particularly in the first half of 2025. This optimism is attributed to Hermes's untapped pricing power, high demand for its leather goods, and a solid base of affluent and loyal customers.
According to Stifel, these elements position Hermes International favorably to safeguard its profit margins in 2025. The firm anticipates that Hermes will manage this despite the potential headwinds from adverse foreign exchange hedging dynamics that might impact the broader industry.
The Stifel analysts underscored the unique strengths of Hermes International, including its ability to command higher prices and its visibility in the leather goods market. This competitive edge is expected to be a key driver in the company's robust performance and its ability to outperform within its coverage universe.
The revised price target and stock rating upgrade reflect Stifel's confidence in Hermes International's strategic positioning and financial outlook, as the luxury brand continues to navigate the global market dynamics.
"In other recent news, luxury goods company Hermes International experienced a significant 15% increase in turnover at constant exchange rates, reaching a total of €7.5 billion for the first half of the year.
This growth spanned all regions and product sectors, with leather goods and saddlery leading the expansion. Despite a challenging macroeconomic environment, the company's recurring operating income rose by 7% to €3.1 billion.
Berenberg, a prominent financial firm, recently initiated coverage on Hermes International, issuing a Buy rating and setting a stock price target of €2,330.00. The firm highlighted Hermes' robust brand position, superior margins, and opportunities for sustained growth.
In addition, Exane BNP Paribas (OTC:BNPQY) upgraded Hermes International from Neutral to Outperform, maintaining a price target of €2,340.00. This upgrade was justified by the company's increased free cash flow generation, supported by an EBIT margin of about 40%.
However, Kepler Cheuvreux maintained a Buy rating but lowered the price target from EUR 2,350 to EUR 2,300, citing a forecasted deceleration in top-line growth and expected margin challenges."
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