Broker snap: Credit Suisse upgrades Burberry to outperform

Date: Thursday 07 Jun 2012

Shares in British luxury firm Burberry were making solid gains on Thursday after Credit Suisse upgraded its rating on the stock from neutral to outperform, saying that the 'brand looks healthier than ever'.

“Our most recent proprietary survey with buyers and merchandise planners from 20 high-end department stores around the world suggest sustained top-line outperformance for Burberry,” Credit Suisse said in a research note this morning.

The broker’s main reasons to favour Burberry include a “healthier than ever” brand, its increasing retail exposure and a better geographic mix.

“While cognizant of potential macro risks for luxury stocks, our call today is about highlighting Burberry as a relative sector outperformer, with its premium P/E [price-to-earnings ratio] valuation to peers well supported by superior CFROI [cash flow return on investment] and perceived long-term corporate activity optionality.”

The broker has raised its target price from 1,420p to 1,650p.

Shares were 5.14% higher at 1,392p by the close of trade.

BC

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