(Sharecast News) - RBC Capital Markets cut its price target on Burberry on Thursday to 1,200p from 1,500p as it reduced estimates ahead of the full-year results, which it said are unlikely to surprise positively.
The bank expects soft revenue momentum in 4Q24 and forecasts a 14% decline in retail like-for-like sales.
"This is likely to drive operating deleverage and potential inventory provisions which creates downside risk to our £401m (below guide) EBIT estimate for FY24E," RBC said.
"For FY25E, we anticipate fairly stable earnings year-on-year leaving little reason to be more positive for now.
"We would like to see stabilisation of retail LFLs, which could drive a re-rating in the shares, currently trading at 16x price-to-earnings."
The bank cut its estimates for FY24 revenues by 2%, gross margins by 30 basis points to 68.4% and EBIT by 7% to £401m.
RBC rates the shares at 'sector perform'.
Burberry (BRBY)