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Investing.com - Bernstein raised its price target on Kering SA (EPA:KER) to EUR240.00 from EUR180.00 on Monday, while maintaining a Market Perform rating on the luxury goods company. The company, with a market capitalization of $46.78 billion, has seen its stock surge 85.5% over the past six months.
The research firm noted that Kering’s valuations have become "increasingly stretched," reaching the 10-year average established during what it called the "halcyon days of maximalism and streetwear" led by Gucci and Balenciaga. This observation aligns with InvestingPro data showing a high P/E ratio of 55.5x, with technical indicators suggesting overbought conditions. Initial investor enthusiasm received further technical support as short positions unwound.
Bernstein acknowledged that Kering has quickly implemented several positive catalysts, including balance sheet improvements and M&A activities that arrived sooner than expected, while efforts to stabilize Gucci and revitalize other brands appear to be taking effect.
The firm pointed out that new Kering CEO Luca de Meo has not yet made significant changes to Gucci’s strategy, which Bernstein considers prudent given that clients would likely not respond well to another reset of the brand.
Bernstein now values Kering on a target 1.40x relative P/E multiple to the MSCI Europe, up from 1.30x previously, applied to a blended forward EPS forecast, resulting in the new price target that remains 27% below the current share price.
In other recent news, Kering SA has been the focus of multiple analyst updates. Morgan Stanley upgraded Kering’s stock rating to Overweight and raised its price target to EUR370.00, expressing confidence that investors will overlook high valuation multiples in the coming year. Similarly, HSBC upgraded Kering from Hold to Buy, increasing its price target to EUR300.00, driven by expectations that the incoming CEO will implement significant changes. Conversely, Berenberg downgraded Kering from Hold to Sell, setting a price target of EUR160.00 due to concerns about demand challenges in the luxury sector, particularly from aspirational and Chinese consumers. Additionally, S&P Global Ratings revised its outlook on Kering to negative from stable, citing weakening credit metrics amid ongoing challenges in the luxury market. These developments highlight varying perspectives on Kering’s future performance in the luxury goods sector.
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