Kering: Analysts take stock of the stock

( – Gucci, flagship brand of the luxury group Kering, announced last night the departure of its creative director Alessandro Michele. Gucci’s design studio will continue to provide creative responsibility for the house until a new organization is announced.

Credit Suisse reiterates its ‘outperformance’ opinion and its target price of 670 euros on Kering, after the announcement of the departure of the creative director, news which it considers a positive catalyst for the title.

“A radical change is required to reinvigorate the growth of the brand and if there is uncertainty over the replacement of Alessandro Michele, his replacement constitutes the most radical change that the group could proceed”, judges the broker.

Compared to its sector, Credit Suisse sees Kering as both risky and higher return given the need to improve Gucci’s performance, but it sees that risk as more than priced in .

Oddo, for its part, maintains its ‘neutral’ rating on the Kering share, with an unchanged target price of 522 euros.

The analyst firm reacts after Kering yesterday announced the immediate departure of Gucci’s creative director, Alessandro Michele.

The broker believes that a transition period is opening with two major questions: how to reconcile an impactful style with a stronger emphasis on historical creations? Is the recent underperformance in sales due solely to a loss of style impact?

Oddo emphasizes the brand’s chronic underperformance in Asia, particularly in China, and an overall image that still needs to be strengthened in the high end.

‘In view of the confirmed poor shape of Gucci’s sales, which represents nearly 2/3 of the group’s operating profits, the stock has seen its discount remain at 30%-35% compared to the LVMH benchmark over the recent period. Such a discount suggests a limited risk of disappointment at this stage,’ concludes the analyst.

UBS confirms for its part its advice to buy on the value and its objective of 575 E. ‘We believe that this is an important catalyst for the title because of the change of creative director’ indicates UBS.

‘ Gucci’s exposure to China is undoubtedly aggravated in the current circumstances of a sharp economic slowdown, beyond the business losses linked to the ultra-restrictive management of the Covid crisis, by a greater dependence on the ‘activity to the youngest classes of consumers, those whose purchasing power may experience more volatility in a degraded economic environment’ explains Invest Securities.

‘In this sense, Gucci’s loss of momentum could prefigure a stronger inflection in the growth of luxury sales in general in the Middle Kingdom’ adds the analysis office.

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