Berenberg points out upside from Burberry Group's rebranding

13th Aug 2018 12:51

(Sharecast News) - Analysts at Berenberg marked-up their target price for shares of Burberry, on the back of changes to their foreign exchange assumptions, from 2,220p to 2,350p.More specifically, they raised their forecasts for the fashion house's earnings per share by 4%, 5% and 5%, in fiscal years 2019-2021, respectively.In the same research note, they also sounded a very positive note on the company's rebranding under its creative director, Riccardo Tisci.Under a 'blue-sky' scenario, the re-branding might see the shares' 'fair value' rise as high as 3,000p, from 2,350p, they said.Key to their analysis was the impact that a rebranding excercise could have on a company's popularity and hence on its sales.They found that in other instances of successful company rebrandings, within the first year a company's trends tended to outperform those of its peers by 21%."This analysis offers no guarantees, but we believe the evidence from the industry points to the positive impact rebranding can have on a brand's popularity and, later, its sales performance", analysts Zuzanna Pusz, Mariana Horn an Lauren Molyneux said.Applying those findings to their 'bull-case' scenario for Burberry, which assumed the rate of growth in the company's like-for-like sales in fiscal year 2020 would double from 4% to 8%, implied EPS upside of roughly 10%, 20% and 30% over 2020-2022.Berenberg reiterated its 'buy' stance on Burberry.