Hermès: Oddo BHF has raised its price target

(CercleFinance.com) - Hermès has reported sales of E3805m for Q1 2024, up +12.
6% on a reported basis and +17% cc. Oddo BHF's forecast of
E3713m reflected organic growth of 13.5%, while the Visible Alpha consensus of E3683m was for growth of +13%.

Following this publication, Oddo BHF raised its target price from E2249 to E2291 to reflect the increase in its earnings forecasts. The analyst remains Neutral on the stock, however.

As in Q4, growth remains robust and relatively homogeneous by geography, with double-digit growth in the major zones (Europe 14.6%, France 14.3%, Americas 11.8%, Asia Pacific 13.9%) and Japan still particularly favourable at 25.2%, Oddo BHF says.

It is a good reflection of the 8%/9% average price increase achieved since the start of the year (below average in the US and above average in
Japan).

In terms of product divisions, the analyst highlights the strong growth in leather goods, which fully reflects the price effect at +20.3% (Oddo BHF was expecting +16%). By contrast, growth was more subdued for Silks and Textiles at +7.9%, Watches at +4.3% and Perfumes and Cosmetics at +4.3%.

The Group confirms that store traffic in Greater China slowed in March after a very good holiday season.

The analyst says that the pace of growth in leather goods will slow. For this division, he maintains the annual target of +6/7% volume growth with a +8/9% price effect, i.e. growth in value of around +15/16%.

For FY 2024, our y-o-y growth forecast at cc has been raised from +11.5% to +13.6% to reflect the impact of the re-insourcing of distribution in the United Arab Emirates. We still expect a lower growth trend than in Q1, with Q2 at +12.2%, Q3 at +11.4% and Q4 at +13.9%. All in all, our EBIT forecast for 2024 has been raised by 2%. For 2025 and 2026, we expect organic growth of close to 10% for both years, with EBIT margins of 40.3% for 2025 and 40.5% for 2026, Oddo BHF adds.


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