H&M: Credit Suisse raises price target

(CercleFinance.com) - Credit Suisse raised its price target on H&M shares, citing higher margins, but also seeing little growth at the Swedish fashion giant.


September sales (-5%) imply good brand momentum compared to core markets, the brokerage pointed out in a note.

Credit Suisse - which raised its price target to 150 Swiss francs from 138 Swiss francs - said it now forecasts EBIT margin recovering to 8% by 2023.

However, the brokerage said it now estimates the shares are discounting a terminal EBIT margin of more than 11%, which seems "very optimistic" given the poor outlook for store-based branded apparel retail.

Credit Suisse also noted the likelihood of negative space growth for at least the next 3 years, with H&M planning to step up gross store closures to 350 next year.

Credit Suisse hence keeps its "underperform" rating on the shares.

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