Broker snap: Credit Suisse reiterates 'outperform' rating for Burberry

18th Dec 2012 09:29

Following last week's Burberry management roadshow in New York, Credit Suisse has maintained its 'outperform' rating and 1,430p target price for the luxury brand group.The broker said that the meeting "reinforced our belief that Burberry's brand elevation and leading digital media story remains intact".As for China, Burberry's key growth market, Credit Suisse highlighted that while there is some near-term uncertainty, the long-term positive are still evident."Management remains bullish on long-term fundamentals and - similar to its luxury peers - Burberry is taking action to address a more complex customer base (more sophisticated HNWI & core luxury clientele moving away from logo products, at the same time many first-time aspirational buyers who remain logo-driven; rising overseas travel flows, increased customer service requirements, etc)."Meanwhile, managed reiterated its focus on the top 30 flagship cities which account for around 60% of group revenues and is planning a 10% annual space increase. Credit Suisse said that Fragrance & Beauty is expected to be Burberry's fastest-growing division in the coming years "where management has great ambitions to follow the success path of the likes of Dior/Chanel."The stock is trading at 17 times full-year earnings which is in line with the sector average, the broker said.BC