Inditex: HSBC raises target price

(CercleFinance.com) - HSBC announced on Wednesday that it had raised its target price for Inditex from E55 to E57, saying it still sees the ready-to-wear group as "best in class".


The broker, which is maintaining its buy recommendation on the stock, cautiously forecasts a 7.1% rise in sales for the Spanish clothing manufacturer in Q4 ahead of the publication of its annual results, scheduled for 12 March.

It also says it expects taxable profits to be in line with consensus forecasts.

Over the longer term, the broker believes that the E1.8bn capex that the group plans to make should enable it to sustain its growth.

While noting that the stock is currently trading at 27.2x earnings, compared with a five-year average of 23x, HSBC believes that this premium is justified in view of the quality of its results compared with the rest of the sector.


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