Broker snap: Lack of upgrades at Burberry, but Investec stays a buyer

23rd May 2012 09:45

Investec has reiterated its buy recommendation and 1,690p target price for British luxury brand Burberry in spite of today's negative market reaction to the firm's full-year results.Adjusted pre-tax profits, up 26% year-on-year at £376m, were exactly in line with consensus, the broker said this morning in a research note. Meanwhile, the "good news" was that the retail/wholesale operating margin improved by 80 basis points to 16.4% and a "modest improvement" is expected in the current year.Investec also highlights that Burberry London and Burberry Prorsum brands now account for 45% of apparel revenue, up from 40% last year, which is "ahead of expectations and shows that Burberry is becoming ever-more luxury.""We don't expect to change our underlying trading forecasts. The lack of upgrades may see bears take issue today, but we are happy to remain buyers given the group's long-term potential," the broker said.Shares were down 2.96% at 1,345p by 10:45 on Wednesday.BC