The forecast for both luxury brands is of a performance around +12%. That’s why UBS’ spotlight shines on them: 2021 will be Hermès and LVMH’s year, as the bank confirmed the “buy” rating for both. The estimates for Prada are also very positive: analysts are betting the stock price will increase by +30%.
Yet, the brand managed by Miuccia and Patrizio Bertelli is dealing with other matters for this period, thus the rating for it remains “neutral”. The luxury segment, according to the Swiss analysts, proved itself resilient even during the pandemic.
How? “The stability of prices, the high margins – summarizes MFF -, the high level of liquidity and the digital advantages”. But Covid-19 isn’t going to spare other brands: some will suffer harsher consequences”.
2021 will be the year of Hermès and LVMH
“Within this context – write UBS’ analysts – we maintain a preference toward LVMH and Hermès, both ranked “buy”. For Prada, on the other hand, the matter is more complicated: the rating is now “neutral”, due to “a significant decrease in the brand’s momentum, which we expect will increase the density and profitability of sales”. For what brands will 2021 be a negative year? Ferragamo, for example, forecasted at -1%.
But even more so Burberry: “We leave the “sell” rating – sentences UBS – due to the lack of signal from the brand in inverting the downward trend”. For some stocks, 2021 will be a transition year. “Kering is going to become neutral, from buy, as more time will be required to recover the lost revenue and profits of 2019, while Gucci is entering a new phase of its strategy”. Something similar goes for Tod’s: “previously rates sell, it has now become neutral, thanks to a likely lower cost-base for next year”.
Image taken from hermes.com
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