CFRA maintains Buy rating, SEK180 target on H&M stock

Published 31/01/2025, 19:52
CFRA maintains Buy rating, SEK180 target on H&M stock

On Thursday, CFRA analyst Zachary Warring reaffirmed a Buy rating and a SEK180.00 price target for Hennes & Mauritz AB (ST:HMb) (HMB:SS) (OTC: HNNMY). Warring’s valuation is based on 21.2 times the firm’s fiscal year 2024 (November) earnings per share (EPS) estimate, which is slightly below H&M’s 10-year average forward price-to-earnings (P/E) multiple of 22.6x. The analyst kept the EPS forecasts for fiscal years 2024 and 2025 unchanged at SEK8.50 and SEK9.00, respectively.

H&M reported a normalized EPS of SEK3.11 for the second quarter, compared to SEK2.02 in the same period last year, but fell short of consensus estimates by SEK0.18. Revenue for the quarter was SEK59.6 billion, an increase from SEK57.6 billion year-over-year but SEK166 million below estimates. The company’s stock experienced a significant drop, falling over 12% on Thursday following the announcement that sales in June are expected to decrease by 6% year-over-year. This anticipated decline was attributed to a particularly strong June in 2023 and unpredictable weather conditions in several of H&M’s major markets.

Despite the challenges outlined, H&M has expressed confidence in reaching a 10% operating margin for the year, although it acknowledged that external pressures might make this goal more difficult to achieve. Notably, the company’s Q2 gross margin saw a substantial improvement of 400 basis points, reaching 54.0%, and the operating margin increased by 320 basis points to 8.1%.

CFRA’s Warring expressed optimism about H&M’s prospects, citing the company’s strategic positioning in the low-cost apparel sector. He believes that H&M’s focus on operational efficiency and prioritization of margins over growth will position the company to outperform in the market.

In other recent news, Hennes & Mauritz AB (OTC:HNNMY), commonly known as H&M, has experienced significant changes in its financial outlook. RBC Capital downgraded H&M’s stock from Outperform to Sector Perform, citing a cautious outlook on the company’s sales recovery timeline. This downgrade comes as H&M implements a brand revamp strategy, focusing on eight key cities worldwide. Despite positive influence on the revamped stores, RBC Capital anticipates a prolonged recovery period due to the competitive landscape and extensive nature of H&M’s transformation.

In a separate note, Redburn-Atlantic downgraded H&M from Neutral to Sell, adjusting the price target to SEK125.00. The firm voiced concerns about H&M’s ability to grow its top line and indications of underinvestment. Redburn-Atlantic’s analysis suggests a modest earnings compound annual growth rate of just 3% from 2024 to 2027 for H&M.

Other analysts have also weighed in on H&M’s financial prospects. HSBC maintained a Buy rating, adjusting the price target for H&M to SEK185, anticipating a cyclical upturn in discretionary spending within key European markets. Meanwhile, UBS slightly decreased its price target for H&M to SEK191, retaining a Buy rating, noting the brand’s improving sales trajectory. These are the recent developments shaping the financial outlook of H&M.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.