Hermes International offers investors protection from a short-term downturn in the luxury industry, say analysts at BNP Paribas Exane, who upgraded the Birkin bag maker to outperform for the first time.
Amid a tough industry environment, “the defensibility and visibility of its business model should enable Hermès to continue delivering significantly above-average sales growth over the extended period,” analysts including Antoine Bergé and Melania Grippo wrote in a note.
Luxury goods stocks including LVMH, Gucci parent Kering SA and Burberry Group have fallen this year on concerns about weakening demand, partly due to China’s economic slowdown.
In contrast, Hermes has been stable, with its leather-goods division benefiting from long waiting lists and rising prices, noted Exane, which has maintained a neutral rating since 2018. Hermes shares were up 1.5% at the open.
Exxon also cut its earnings forecasts and price targets for most other luxury stocks it covers, noting the sector faces “near-term pain.”
Swiss watchmaker Swatch Group’s rating was downgraded to “underperform” from “neutral,” sending the company’s shares down as much as 0.9% on Tuesday.
Joe Easton
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Hermes beats rivals with huge sales surge
The French luxury brands group’s sales grew to 3.7 billion euros ($4.02 billion), with organic sales, excluding currency fluctuations, rising 13 percent.
