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On Thursday, TD Cowen analysts increased the price target for Compagnie Financiere Richemont SA (JO:CFRJ) (CFR:SW) (OTC: CFRUY) to CHF210 from the previous CHF187, while reiterating a Buy rating on the stock. The firm’s analysts highlighted the company’s resilience in the U.S. market, its strategic supply chain investments, and its exposure to aspirational customers as key factors supporting their positive outlook. According to InvestingPro data, the luxury goods maker, currently valued at $117.46B, has demonstrated impressive momentum with a 47.1% price return over the past six months.
Richemont (SIX:CFR), known for its luxury jewelry and watches, is expected to benefit from easier fourth-quarter comparisons in China, where sales are improving from a 12% decline to a 13% increase. TD Cowen’s analysts pointed to the company’s momentum in jewelry sales and its agile supply chain as reasons for the optimistic stance. The company maintains impressive gross profit margins of 67.58%, reflecting its strong pricing power in the luxury segment. While analysts noted the price-to-earnings ratio expansion to 27 times, they find the stock appealing despite its current P/E ratio of 81.65x.
The raised price target to CHF210 is based on 28 times the firm’s new fiscal year 2027 earnings per share estimates. TD Cowen’s model anticipates an 18% earnings per share growth for the next fiscal year ending March 2026 and a 9% growth in fiscal year 2027. However, the forecasted EBIT margin for fiscal year 2027 at 24.0% is still below the peak margin of 25.2% seen in fiscal year 2023, suggesting potential for further financial improvement. InvestingPro analysis reveals 13 additional key insights about Richemont’s valuation and financial health, available to subscribers.
Analysts at TD Cowen also identified key drivers for potential margin growth in the next fiscal year. These include the full-year impact of the Gianvito Rossi acquisition, as well as the accelerated amortization associated with this acquisition. Additionally, they expect that leveraging on fixed costs will be possible if sales continue to maintain their current momentum. The company’s strong financial position is reflected in its GOOD overall health score from InvestingPro, with notably strong cash flow and profit metrics.
In other recent news, Compagnie Financiere Richemont SA has seen a series of analyst upgrades and target price increases, reflecting its robust financial performance and growth potential. Morgan Stanley (NYSE:MS) upgraded Richemont’s stock rating to Overweight and raised the price target to CHF 200.00, citing a positive outlook on the company’s financials and future growth. The firm has also revised its earnings estimates for Richemont significantly higher for the fiscal years 2025 to 2027. Similarly, Citi analysts increased their price target to CHF 193 while maintaining a Buy rating, highlighting Richemont’s strong sales performance, particularly in its jewelry houses Cartier and Van Cleef, despite challenges in Mainland China. Citi has revised its forecasts for sales, EBIT, and EPS for the fiscal years 2025 to 2027, reflecting the company’s promising trajectory. Bernstein analysts also increased their price target to CHF 190, retaining an Outperform rating due to Richemont’s strategic positioning in the luxury sector and its impressive financial results. The company’s focus on hard luxury items and sensible price adjustments have contributed to its favorable outlook among investors. These developments underscore Richemont’s strengthened position and positive prospects in the luxury market.
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