Should you own Hugo Boss stock? BofA shares its take

Investing.com -- BofA Securities has maintained its “underperform” rating on Hugo Boss (ETR:BOSSn), maintaining a price objective of €39, just above the stock’s current trading price of €38.01. 

Analysts cited continued earnings pressure, foreign exchange headwinds, and subdued consumer sentiment as key reasons behind their cautious stance.

In a note dated Wednesday, BofA flagged risks to second-half performance, despite expectations for second-quarter results to be broadly in line with consensus. 

The brokerage projects group revenue to grow 1.4% on a constant currency basis and fall 1.7% on a reported basis due to a 2.9% FX translation drag. 

Adjusted EBIT is forecast at €82 million, with an EBIT margin of 8.3%. Gross margin is expected to improve by 10 basis points year-over-year, helped by lower freight and product costs, but constrained by ongoing promotions and adverse currency effects.

Retail sales are expected to decline 1%, compared to a 4% drop in the first quarter. Wholesale is projected to rise 4%, rebounding from a 3% decline. 

Regionally, BofA models EMEA growth at 2.5%, the Americas at 2%, and Asia-Pacific down 6%, all in constant currency terms.

The report notes that apparel sector trends are mixed. Key U.S. peers like Ralph Lauren (NYSE:RL) and Tapestry (NYSE:TPR) continue to outperform, while Hugo Boss lags, particularly in Asia. 

The analysts say the brand’s promotional activity remains elevated, especially in the U.S., where discounts have been present every month this year. This is expected to be a 60 basis point headwind to margins in the second quarter.

Hugo Boss trades at 11.7x 2025E earnings, below peers, but BofA sees little room for a re-rating. 

The brokerage cut its 2025–27 EBIT estimates by 2–3%, citing both weaker fundamentals and FX pressure, and is now 7–10% below consensus EBIT. 

Its 2025 EPS estimate stands at €3.24, below the Visible Alpha consensus of €3.35. EBIT is forecast at €362 million with a margin of 8.7%. Net income is seen at €224 million, translating to a margin of 5.4%.

Valuation metrics show a dividend yield of 2.99% for 2025 and EV/EBITDA of 4.69x. Free cash flow yield is estimated at 13.6%. 

Cost control measures remain a partial offset, with operating expenses forecast to decline 4% year-over-year in the second quarter.

While June trends remain uncertain, available retail data to May shows a 270 basis point sequential improvement across Germany, the U.S., and the U.K., markets comprising 42% of Hugo Boss sales. 

However, BofA analysts remain cautious on whether this momentum can be sustained, especially with FX volatility and soft demand weighing on performance.