Hermès: Oddo BHF leaves its opinion unchanged

(CercleFinance.com) - On the basis of 3rd quarter sales published at 3,704 ME (Oddo BHF was expecting 3,647 ME and the Visible Alpha consensus was 3,692 ME), the Group's growth slowed to 11.
3% for the quarter after a 2nd quarter at 13.3%.

Oddo BHF considers that this growth remains comfortable in view of a sector whose activity is likely to decline by 2%/3% over the period.

Leather goods grew by 14% (Oddo BHF was expecting +11.8%), which gives, for the rest of the portfolio, a weaker but still solid growth of 9.4% (we were at +10.1% in Q2) reflecting a very negative performance in watchmaking (-18%) and a moderate positive for silk (+4%) but still in double digits in the other divisions' indicates the analyst's office.

The analyst points out that Asia Pacific is clearly marking time at +1%, 'the slowdown in China having gained momentum against the backdrop of a more difficult basis of comparison for the Group, but growth is robust everywhere else'.

Hermès sees no change in business trends in October. The growth target for Leather Goods has been confirmed for the year at +15%/+16%, after +17% for 9 months, which means that Q4 growth is expected to be weaker".

"Hermès is not specifying at this stage the price increase that will be passed on in 2025, but we understand that this should be in the vicinity of 5%, which will remain above the average to be expected for the sector".

Oddo BHF's annual forecasts remain unchanged. The analyst expects growth of 10.2% in Q4 cc (leather goods at +13.6% and the rest at +7.8%) and +9.6% for 2025 (leather goods at +12% and the rest at +7.9%).

In terms of EBIT margin, Oddo BHF anticipates 37.6% for the 2nd half, compared with 40.2% for the 2nd half last year, giving a full-year margin of 39.8%, compared with 42.1% for 2023. EBIT margin for 2025 is expected to be stable at 39.8%.

The share's valuation limits its potential. Oddo BHF confirms its Neutral opinion, with an unchanged target price of E2,164.

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