H&M: UBS no longer Buy

(CercleFinance.com) - UBS announced on Friday that it had downgraded its opinion on H&M shares from 'buy' to 'neutral', with a target price reduced from SEK 187 to SEK 149.


In a research note, the analyst recalls that its positive opinion on the stock was previously based on the prospect of a turnaround in business accompanied by a recovery in operating margin.

From his point of view, the recent favorable trend in supply, prices and procurement costs, as well as the disposal of small secondary brands (Afound/Monki), were all steps in the right direction.

But the prolonged weakness in sales and the volatility of operating margins suggest that the recovery will take much longer than we had previously anticipated", adds the intermediary.

UBS explains that this situation could lead the clothing manufacturer to resort to promotional offers likely to penalize profit margins, not to mention the hardening of other exogenous factors.

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