RBC Capital cuts Burberry price target ahead of FY results

RBC Capital Markets cut its price target on Burberry on Thursday to 1,200p from 1,500p as it reduced estimates ahead of the full-year results, which it said are unlikely to surprise positively.

The bank expects soft revenue momentum in 4Q24 and forecasts a 14% decline in retail like-for-like sales.

"This is likely to drive operating deleverage and potential inventory provisions which creates downside risk to our £401m (below guide) EBIT estimate for FY24E," RBC said.

"For FY25E, we anticipate fairly stable earnings year-on-year leaving little reason to be more positive for now.

"We would like to see stabilisation of retail LFLs, which could drive a re-rating in the shares, currently trading at 16x price-to-earnings."

The bank cut its estimates for FY24 revenues by 2%, gross margins by 30 basis points to 68.4% and EBIT by 7% to £401m.

RBC rates the shares at ‘sector perform’.