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Investing.com -- Burberry (LON:BRBY) shares rose more than 5% in London trading on Wednesday as Wall Street analysts adopted a more positive stance ahead of the company’s first-quarter trading update due July 18.
Analysts at Jefferies said the Q1 sales “should confirm the brand’s newfound (relative) resilience.”
The broker raised its price target on the stock to 580p, from 490.
“However, pricing in a margin rebuild in line with mgmt expectations requires stronger proof of success than the -2% we expect (on still the lowest sales densities in the industry),” the analysts led by James Grzinic added.
“Good progress has been achieved under new leadership, and near term profit expectations are derisked,” they continued.
The price target hike reflects progress in the stock’s re-rating since the second half of last year, with its price-to-earnings (P/E) rising from 12.9x to 21.4x.
Still, analysts remain cautious on the turnaround, noting the valuation still looks demanding, with earnings multiples falling to 55x, 36x, and 27x over the next three fiscal years. They argued that limited evidence of sequential momentum makes the upside potential appear overpriced at current levels.
Separately, analysts at HSBC also lifted their target price (TP) to 1,400p from 1,250p on higher earnings estimates.
“We raise our TP on the back of higher profitability prospects for the group, given the ongoing initiatives, especially in terms of cost cutting that we see paying off in the future,” analysts led by Anne-Laure Bismuth said.
HSBC raised its terminal EBIT margin assumption for Burberry to around 19% from 17% in its DCF model.
The bank noted that few names in the luxury space currently stand out, making it increasingly difficult to discuss the sector as a whole—especially amid persistent macroeconomic and geopolitical headwinds.
“We believe Burberry is going to be one of the few to stand out,” it added.
Meanwhile, Barclays (LON:BARC) analysts expect Burberry’s retail comparable sales to decline 4% in the first quarter of fiscal 2026, marking a slight improvement from the previous quarter. The bank attributed the expected recovery to “easier comps and gradual brand heat improvement.”