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The revised price target of CHF193 implies a price-to-earnings ratio of approximately 25 times the calendar year 2026 estimates. Citi's commentary highlights Richemont (SIX:CFR)'s fundamental strengths, which include a larger scale, a more balanced mix of product categories and geographic presence, an agile supply chain with shorter production lead times, tighter control over distribution, cleaner inventory levels in wholesale, and a stronger net cash position. InvestingPro data reveals the company's solid financial health with a "GOOD" overall score of 2.97, supported by strong price momentum and profitability metrics. Unlock comprehensive financial analysis and more than 30 key performance indicators with an InvestingPro subscription. InvestingPro data reveals the company's solid financial health with a "GOOD" overall score of 2.97, supported by strong price momentum and profitability metrics. Unlock comprehensive financial analysis and more than 30 key performance indicators with an InvestingPro subscription.
Richemont's third-quarter sales showcased a robust year-over-year growth of 10% in constant foreign exchange rates, which jumps to 16% when excluding Mainland China, where there was an 18% decline. The positive trend across developed markets and non-China Asia contributed to the improved outlook. The company maintains impressive gross profit margins of 67.58%, reflecting its strong pricing power in the luxury segment.
Citi's analysts have accordingly revised upward their forecasts for Richemont's sales, EBIT, and EPS for the fiscal years 2025 to 2027. The estimates for sales, EBIT, and EPS have been increased by 4%, 5%, and 5% for FY25, and by 7%, 9%, and 9% for FY26, and by 8%, 10%, and 10% for FY27, respectively. These revisions reflect the company's strong performance and promising future trajectory.
The revised price target of CHF193 implies a price-to-earnings ratio of approximately 25 times the calendar year 2026 estimates. Citi's commentary highlights Richemont's fundamental strengths, which include a larger scale, a more balanced mix of product categories and geographic presence, an agile supply chain with shorter production lead times, tighter control over distribution, cleaner inventory levels in wholesale, and a stronger net cash position. Potential changes in succession were also noted as factors that could influence the company's future.
The analysis by Citi underscores Richemont's effective 'pay-as-you-go' approach to cost and capital expenditure management, which is expected to continue bolstering the company's profit and loss trajectory over the next 12 to 18 months. This strategy, alongside careful monitoring of sell-out and inventory levels within third-party watch distribution, is anticipated to support further financial improvements for Richemont.
In other recent news, Cie Financiere Richemont SA saw its stock price target increased by Bernstein analysts, following a robust performance in the luxury sector. The analysts revised the target to CHF190 from CHF145 while maintaining an Outperform rating on the stock. Richemont's strategic positioning and focus on hard luxury items have contributed to its strong performance, with the company maintaining a gross profit margin of 67.6% and a track record of consistent dividends for 36 consecutive years.
Recent developments include impressive results in the fourth quarter of 2024, which prompted analysts to revise their financial models. Adjustments were made to the latest third-quarter 2025 reported figures and expectations for the fourth quarter of 2025, indicating ongoing momentum. Consequently, Bernstein increased earnings per share forecasts for fiscal years 2025 and 2026 by 4%.
The revised valuation of Richemont is based on a target relative price-to-earnings multiple of 2.00, up from the previous 1.85. This adjustment acknowledges Richemont's strengthened position within its category for the estimated fiscal year 2025. Bernstein analysts assert that the revised price target of CHF190 reflects Richemont's strong performance and favorable prospects in the luxury market.
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