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On Friday, CFRA analysts revised their position on Hennes & Mauritz AB (ST:HMb) (HMB:SS) (OTC: HNNMY), downgrading the stock from Buy to Hold and adjusting the price target to SEK145.00 from the previous SEK170.00. The change in stance was influenced by concerns over global macroeconomic uncertainties that could impact consumer spending.
CFRA’s revised price target for H&M stock is based on a forward price-to-earnings (P/E) ratio of 17.9x for the fiscal year 2025, which is a reduction from the earlier estimate. This new target represents a discount compared to the five-year average forward P/E of 24.1x. The firm’s analysts have cited the challenging economic conditions as a justification for the lower valuation.
The downgrade follows H&M’s fourth-quarter financial results for fiscal year 2024, which showed a year-over-year net sales decrease of 1%. This decline was partially attributed to the timing of Black Friday. Although H&M has shown progress in improving its margins and operational efficiency, analysts at CFRA express concern regarding the company’s capacity to maintain growth in the competitive fast-fashion industry.
The revised earnings per share (EPS) forecasts for H&M have been lowered to SEK8.10 from SEK9.00 for fiscal year 2025, and to SEK8.95 from SEK9.31 for fiscal year 2026. The analysts have pointed out the risks associated with the fast-fashion retailer’s performance, including competitive pressures and execution risks, as well as the absence of immediate factors that could significantly boost the stock’s value.
In their assessment, CFRA analysts have underscored H&M’s susceptibility to shifts in the macroeconomic landscape, particularly because the fast-fashion sector relies heavily on discretionary consumer spending. The firm’s analysts suggest that these factors contribute to the decision to adopt a more cautious outlook on H&M shares.
In other recent news, Hennes & Mauritz AB (OTC:HNNMY) (H&M) has seen varied assessments from analysts regarding its financial outlook. UBS downgraded H&M from Buy to Neutral, citing concerns over a longer-than-expected turnaround time and reduced its price target to SEK 149. UBS expressed concerns about sales volatility and lowered its earnings per share predictions for fiscal years 2025 and 2026. Similarly, Barclays (LON:BARC) downgraded H&M from Overweight to Equalweight, setting a new price target of SEK 145. Barclays highlighted a decrease in earnings per share forecasts for fiscal years 2025 and 2026, reflecting cautious sentiment about the company’s growth strategies.
In contrast, JPMorgan maintained its Underweight rating with a price target of SEK 130, anticipating challenges in H&M’s upcoming earnings report for the first quarter of 2025. JPMorgan forecasts a decline in earnings before interest and taxes and a drop in gross margin, placing the stock on Negative Catalyst Watch. Meanwhile, CFRA maintained a Buy rating with a SEK 180 price target, despite H&M’s recent quarterly revenue falling slightly below estimates. CFRA noted H&M’s improved gross and operating margins and expressed optimism about the company’s strategic focus on operational efficiency. Investors will closely monitor H&M’s forthcoming financial disclosures for further insights into its market position and profitability.
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