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Investing.com - Barclays downgraded Hermes International (EPA:RMS) stock rating to Equalweight from Overweight on Tuesday, while lowering its price target to EUR2,310.00 from EUR2,510.00.
The downgrade reflects Barclays’ view that Hermes faces "fewer short-term catalysts to drive the shares" despite its high-quality profile. The investment bank noted that Hermes has been delivering single-digit growth year-to-date, which it expects to continue in Q4, potentially making the stock less attractive to investors.
Barclays also highlighted that Hermes’ top-line outperformance versus the luxury sector may narrow in 2026 as the broader luxury space benefits from a small rebound. The bank does not anticipate significant EBIT margin acceleration for Hermes in the year ahead, despite good top-line growth, citing the company’s stable level of operating leverage.
On the valuation front, Barclays observed that Hermes still trades at a two-year forward price-to-earnings ratio of 40.0x, which is 1% above its historical average.
Hermes International is traded on the Paris Stock Exchange under the ticker RMS and is also available to U.S. investors via over-the-counter markets as HESAY.
In other recent news, Hermes confirmed the departure of Veronique Nichanian, its long-serving artistic director of menswear. Nichanian, who has been with the company for 37 years, will present her final collection in January. In addition to this, Hermes has seen a shift in analyst ratings. Morgan Stanley downgraded Hermes from Overweight to Equalweight, citing expectations of slower medium-term growth. The investment bank adjusted its growth projections to high single-digit figures, down from low double-digit expectations. Similarly, HSBC downgraded Hermes from Buy to Hold, reflecting adjustments in its financial models. HSBC also lowered its price target due to revised earnings estimates and an increased weighted average cost of capital. These developments highlight recent changes impacting Hermes and its market outlook.
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