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Investing.com - Jefferies initiated coverage on Ermenegildo Zegna Group (NYSE:ZGN) with a Buy rating and a price target of $12.90 on Tuesday. The stock, which has gained nearly 30% over the past six months according to InvestingPro data, has recently seen a 14% pullback in the past week.
The research firm noted that Zegna is currently valued at 18 times earnings, in line with normal luxury stocks at 23 times, despite being closer in nature to ultra-luxury stocks that trade at 38 times earnings. InvestingPro data shows the company maintains impressive gross profit margins of 67% and currently trades at a P/E ratio of 20.8x.
Jefferies forecasts above-consensus organic growth for Zegna, driven by sales density improvements from the company’s ultra-luxury-focused Made-To-Measure and Top Of Pyramid product offerings, which should support strong margin expansion.
The firm highlighted that improvements in the Tom Ford business will remove what has been a drag on Zegna’s overall performance.
Jefferies estimates Zegna will achieve a 20% three-year earnings per share compound annual growth rate, compared to the 15% consensus among other analysts covering the stock.
In other recent news, Ermenegildo Zegna NV reported its second-quarter 2025 earnings, surpassing analyst expectations with an EPS of 0.17, compared to the forecasted 0.14, marking a 21.43% surprise. The company’s revenue reached approximately €928 million. Following these results, BofA Securities raised its price target for Zegna to $10.00 from $9.50, maintaining a Buy rating due to strong margins. Similarly, TD Cowen increased its price target to $10.00 from $8.80, citing strong performance in the core Zegna brand and noting organic sales growth of 2.6% in the first half of 2025.
Additionally, JPMorgan initiated coverage on Ermenegildo Zegna with an Overweight rating and a price target of $11.00, highlighting the company’s focus on high-net-worth individuals through its Zegna and Tom Ford brands. The firm noted successful execution in recent years as a competitive advantage for solid earnings growth. These developments reflect a positive outlook from analysts regarding Zegna’s financial performance and strategic direction.
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