Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its outlook for Hennes & Mauritz AB (ST:HMb) (HMB:SS) (OTC:HNNMY), commonly known as H&M, by reducing the company’s price target from SEK135.00 to SEK130.00 while maintaining a Hold rating on the stock. The revision comes amid a challenging second quarter for the fashion retailer, as noted by Deutsche Bank.
The bank’s analyst pointed out that H&M’s efforts to navigate its turnaround may not be clearly visible in the second quarter’s results. Contributing factors include unfavorable weather conditions across Europe and negative foreign exchange translation effects. Although a constant currency sales growth of 1.5% for the second quarter is forecasted, the reported figures are expected to show a 5% decline after considering a 6.5% headwind from foreign exchange rates.
Deutsche Bank’s revised EBIT (earnings before interest and taxes) forecast for H&M stands at SEK 5.6 billion, which indicates a year-over-year decline of 21%. While this marks an improvement over the 42% decline witnessed in the first quarter, it still poses challenges for demonstrating a sustainable turnaround for the company.
The analyst also highlighted concerns regarding inventory accumulation. The buildup that occurred at the end of the first quarter is likely to persist into the second quarter, potentially leading to additional challenges in the third quarter as H&M works to manage its stock levels.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.