Broker snap: Alphaville upgrades Burberry as growth continues

28th Sep 2011 11:55

Broker Alphaville has lift its recommendation on luxury goods group Burberry to "reduce" from "sell", pointing to its strong first quarter update.The broker notes that the rich continue to favour luxury products despite their expense."The emerging markets are continuing to zoom with stores acquired in China contributing 20% to the retail business's underlying growth," Alphaville says. It notes that the momentum has been maintained despite "bleak" economic news, but adds: "However, the recent collapse of equity markets if maintained could have an impact on luxury products' consumption."It notes that the shares trade at about 25 times earnings, which causes it to "see the share valuation as being stretched."