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Investing.com - UBS downgraded Hermes International (OTC:HESAF) (EPA:RMS) stock rating from Buy to Neutral on Thursday, while lowering its price target to EUR2,389.00 from EUR2,704.00.
The Swiss bank cited concerns about the changing nature of the luxury goods maker’s equity story, pointing to Hermes’ much larger size now compared to previous years and early signs of softening brand perception among higher-income clients.
UBS noted that while Hermes has traditionally been considered a safe investment during uncertain periods in the luxury goods sector due to its resilient growth profile, particularly with leather goods demand exceeding supply, this dynamic may be shifting.
The downgrade follows Hermes’ recent H1 results, after which UBS updated its earnings estimates, reducing its EPS forecasts by 1%, 8%, and 9% for fiscal years 2025, 2026, and 2027, respectively.
UBS expressed concern about potential risks to Hermes’ 2026 earnings, specifically mentioning slowing like-for-like sales growth, foreign exchange impacts, and lower pricing power as factors that could limit upside potential for the stock.
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