(CercleFinance.com) – Stifel raises its EBIT forecast for Hermès for the financial year 2022-2023E by 1 to 2%, in anticipation of the results for the financial year 2022 expected on February 17.
“This slight increase is largely explained by organic sales growth and slightly higher margin assumptions,” the analyst said.
Stifel raises its price target to E1,500 and confirms its advice to Hold, which implies a target PER of 40x for 2024, broadly in line with the average PER of the last 10 years.
“Its high valuation multiple is supported by best-in-class fundamentals and 2023 consensus upside risks from accelerating prices and the reopening of China,” the analysts said.
“We now expect operating profit of +17% in Q4 2022 (vs. +15% previously). In Asia-Pacific we expect +15% in operating profit, which contrasts with recent declines in the region by companies like Richemont, Burberry and Boss due to the COVID disruption in China.
Stifel now expects gross operating profit of +12% for 2023 (vs. +10% previously) supported by high single-digit prices and the expected impetus from the reopening of China and the resumption of markets. Chinese trips abroad.
‘ We are now modeling an operating margin of 40.2% for 2023E up 40 basis points from 39.8% in 2022E, which is not unreasonable for a luxury mega-brand generating more than 11 billion. euros in turnover and of which almost half of the sales come from leather goods’ adds the analyst.
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