Prada: one of the sector's favorite stocks according to Oddo BHF

(CercleFinance.com) - Oddo BHF confirms its Outperform recommendation on the stock, with an adjusted price target of HKD 65 (versus HKD 66.
40).

The analyst believes that the group should continue to grow at a pace well above that of the industry over the coming quarters.

We are therefore only marginally adjusting our sales growth forecasts for Q3 and Q4. For Q3, we are expecting +15% y/y cc in retail with Miu Miu at +78% and Prada at +3.4%, for Q4 we are anticipating total retail growth of +10.6% with Miu Miu expected at +48% and Prada at +3%' says Oddo BHF.

'We are lowering our sales and EBIT forecasts by almost -1% for 2024 and 2025. Our EBIT margin forecasts remain unchanged at 23.1% for 2024 after 22.5% published in 2023 (2nd half margin expected at 23.5% +60 bps y/y) and 23.8% for 2025' adds the research firm.

The stock is trading at a multiple discount of almost 17% to the LVMH sector benchmark, which we feel is too conservative given the remarkable breakthrough achieved by the Miu Miu brand and the still significant potential for the parent Prada brand, particularly in terms of improving sales performance and profitability. The share remains one of our favorite stocks in the sector', says Oddo BHF.

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