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Investing.com - Berenberg downgraded Kering SA (EPA:KER) stock rating from Hold to Sell on Thursday, setting a price target of EUR160.00. According to InvestingPro data, the luxury goods maker, currently valued at $44.79 billion, trades at a demanding P/E ratio of 53x despite showing revenue decline of 14.6% in the last twelve months.
The downgrade comes as Berenberg analyst Nick Anderson expressed concerns about demand-side challenges in the luxury sector, particularly from "constrained aspirational and Chinese consumers."
While the market views newly appointed CEO Luca de Meo as potentially unlocking value in Kering’s iconic brands similar to a "Burberry 2.0" turnaround story, Berenberg believes pressure on top-line revenues will overshadow any cost-cutting initiatives.
The research firm noted that although the new CEO will likely improve returns, revenue challenges will dominate share price performance in the near term.
Berenberg’s decision to downgrade Kering comes as the luxury group’s enterprise value to sales ratio has reached levels comparable to industry leader LVMH.
In other recent news, Kering has seen a flurry of activity from analysts and rating agencies. Morgan Stanley upgraded Kering’s stock rating from Equalweight to Overweight, raising its price target significantly to EUR370.00, expressing confidence in the company’s future valuation. Similarly, HSBC upgraded Kering from Hold to Buy, with a new price target of EUR300.00, anticipating that the incoming CEO will bring about swift and impactful changes. However, S&P Global Ratings has revised Kering’s outlook to negative from stable due to weakening credit metrics, although it maintained the company’s ’BBB+/A-2’ ratings. These developments highlight a mix of optimism and caution among analysts and rating agencies regarding Kering’s future performance.
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