LONDON (ShareCast) - UBS has raised its target price for luxury brand Burberry from 1,370p to 1,580p ahead of its fourth quarter sales update next week.
The broker is expecting the company to report a 16.5% growth in sales (constant currency), significantly lower than the 23.7% growth seen in the first nine months of the year. This will reflect toughening comparatives and specific wholesale effects and FX is also expected to have a negative impact on sales to the tune of -1.3%.
In Retail, UBS expects like-for-like sales growth of 12.5% in the last three months of the year, down from the 14.6% for the first three quarters as a whole. In Wholesale, just 2.4% constant currency sales growth is expected.
While the price-to-earnings multiple of 19 remains in line with the three-year average for Burberry, UBS clearly thinks this is too expensive and retains a neutral rating with the stock trading at a 20% premium to the European luxury sector.
By 11:20 on Friday morning, shares were trading 1.32% down at 1,564p.
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