Hermes: UBS downgrades stock to 'neutral'

(CercleFinance.com) - UBS said on Monday that it had downgraded its rating on the Hermès International share from "buy" to "neutral" after the share's surge in 2021.


In a report, the broker points out that the share price of the leather goods manufacturer jumped by 75% last year, a performance that means that it is now trading at a premium of around 80% to its closest peers, compared with an average of 64% over five years.

The broker notes that over the past year, Hermès' sales have pleasantly surprised, with organic growth of over 30%, against an historical performance of around 20%.

This dynamism, combined with gains in market share, has enabled the group to improve its profitability "significantly", the broker points out, albeit at a level that it does not see being maintained due to the major investments currently being made by the group.

UBS - which has however increased its target price for the share to 1610 euros (from 1475 euros), says it has now reached a better entry point for the stock.

The share is currently down 1.8% at around 1420 euros.


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