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H&M: RBC downgrades to neutral

(CercleFinance.com) - RBC announced on Wednesday that it had downgraded its H&M shares from 'outperform' to 'sector perform', with a target price reduced from 185 SEK to 165 SEK.


While the Canadian broker is impressed by the Scandinavian clothing company's efforts to revive its performance, it is concerned that the turnaround may take longer than expected.

In its opinion, the clothing group will have to face many headwinds next year, not only on the economic front but also in terms of competition.

As a result, it has reduced its earnings estimates by 7% to 8%, to around 10% below consensus.

With a P/E of around 19x for 2025, RBC considers the stock's valuation to be "reasonable", although not sufficiently attractive to justify an "outperform" rating.

Indeed, the broker explains that it expects the stock to struggle to initiate an upward movement until market earnings forecasts are revised upwards.


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