Hermes: Oddo optimistic, raises target price

(CercleFinance.com) - The luxury goods group is organising a CMD tomorrow at its workshops in Pantin near Paris.


Before this meeting, the broker confirms its Outperform rating on the stock with a price target of 1,406 euros.

Oddo does not expect any surprising revelations for Q4, which remains upbeat but is subject to capacity constraints.

Analysts' current Q4 sales forecast is conservative (organic growth y/y at +5%, 2-year growth of 22%), reflecting the expected slowdown in Leather Goods after 2-year growth of +27% over the first 9 months of 2021, the broker says.

Analysts add that margin trajectory is the key issue, their current forecasts are conservative, reflecting the company's past comments. We expect a margin of 34.2% for H2 2021, or an annual margin of 37.3% and 35.3% for 2022 and 2023.

An increase in our post-2021 margin assumptions of 200 bps would lead to an increase of more than 15% in our target price, all other things being equal.

The share is a big winner today, up over 3.7% in late morning trading.


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