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On Friday, JPMorgan increased the price target on Pandora (OTC:PANDY) A/S, a jewelry company, to DKK 1,430 from DKK 1,320, maintaining an Overweight rating on the shares. The revision reflects a positive outlook on the brand's transformation and its potential for sustainable growth and profitability.
JPMorgan's analysis indicates that Pandora has undergone significant changes, transitioning from a charm-focused business to a full jewelry brand. This shift is expected to drive stronger growth, with projections of a 5% increase in like-for-like sales and an 8% rise in ex-FX growth from FY25-29.
The analyst believes that the current management team is capable of achieving what previous teams could not, citing improvements across product ranking, pricing strategy, marketing approach, and management incentives.
The report suggests that Pandora's past operational inconsistencies, which have historically capped the brand's valuation even during strong performance periods, are being addressed. With these changes, JPMorgan sees justification for a re-rating of the stock to 19.5 times FY25 PE.
The raised price target reflects an 8% increase based on the firm's updated long-term sales assumptions. The analyst's commentary underscores the belief in Pandora's longer-term potential, driven by the brand's leading profitability and cash generation. The positive view on the near-term outlook is further solidified by the detailed insights provided in the analysis.
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