Burberry has seen its rating raised from “reduce” to “hold” by influential financial services company Kepler Cheuvreux.
According to Kepler, Burberry’s strategy to reposition itself to a more high-end audience will take time to come into effect, but it had “little doubt the brand will become more attractive”.
It also raised its target price from 1780p per share to 1870p per share, “following the recent share price correction and higher-than-expected first-half earnings.”
Earlier this month Burberry said sales dropped three per cent in the six months to September 29 to £1.22 billion, while operating profit shot up 36 per cent year-on-year to £173 million.
It added that comparable store sales rose three per cent in the first half, and this included growth in the UK despite concerns of weaker consumer demand and lower tourist spend.
“We expect brand momentum to remain unsettled for several months and see only limited room for improvement, since it will take some time for the recent developments made by the company to pay off,” Kepler said.
“We believe the current valuation now reflects the unsettled brand momentum for the next few months.”