Broker snap: Burberry's falling share price an over-reaction

15th Mar 2011 10:54

RBS maintains its positive stance on luxury fashion group Burberry, despite shares taking a hit over the last few days on concerns of its exposure in Japan.While Japanese consumers have accounted for as much as 40-50% of domestic- and international-related luxury goods demand over the past decade, Burberry's 2011 regional sales exposure is around 5-6%, compared with French company Hermes which has the highest exposure of 19%, according to the broker."Clearly, luxury goods share price performances are likely to be adversely impacted by the recent tragic events in Japan," he says. However, "the share price movement this morning (-5%) appears an over-reaction relative to peers," says Guy.While the broker acknowledges that around two thirds of revenues and earnings are driven by Burberry's Japanese licence business, it notes that the financial impact for the current twelve month period is less of an issue as the group is already more than 11 months through the year.RBS remains a 'buyer', with a target price of 1,500p.