Richemont: Credit Suisse now a seller
(CercleFinance.com) - This morning Credit Suisse downgraded its rating on the share of Swiss luxury group Richemont: adopting a sell rating ("underperform"), against a previously neutral stance.
The broker has cut its corresponding target price from 73 Swiss francs to 64 Swiss francs.
In the broker's opinion, the market is underestimating the investments that are required in the group's three main business lines, including jewelry. Cartier, which according to Credit Suisse, represents 54% of Richemont's earnings, will have to renew its ranges, which is positive over the long term, but which will weigh on margins in the short term. In addition, house surveys suggest that the demand for jewelry in China is slowing down, the broker says in its note.
In addition, the outlook for Richemont's watch business is failing to improve, it adds.
Finally, the integration of YNAP, which the group has taken control of, will weigh on its profitability, with Credit Suisse citing fierce competition in luxury e-commerce.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
The broker has cut its corresponding target price from 73 Swiss francs to 64 Swiss francs.
In the broker's opinion, the market is underestimating the investments that are required in the group's three main business lines, including jewelry. Cartier, which according to Credit Suisse, represents 54% of Richemont's earnings, will have to renew its ranges, which is positive over the long term, but which will weigh on margins in the short term. In addition, house surveys suggest that the demand for jewelry in China is slowing down, the broker says in its note.
In addition, the outlook for Richemont's watch business is failing to improve, it adds.
Finally, the integration of YNAP, which the group has taken control of, will weigh on its profitability, with Credit Suisse citing fierce competition in luxury e-commerce.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.