Broker snap: UBS sees moderating growth at Burberry

13th Apr 2012 11:24

UBS has raised its target price for luxury brand Burberry from 1,370p to 1,580p ahead of its fourth quarter sales update next week.The broker is expecting the company to report a 16.5% growth in sales (constant currency), significantly lower than the 23.7% growth seen in the first nine months of the year. This will reflect toughening comparatives and specific wholesale effects and FX is also expected to have a negative impact on sales to the tune of -1.3%.In Retail, UBS expects like-for-like sales growth of 12.5% in the last three months of the year, down from the 14.6% for the first three quarters as a whole. In Wholesale, just 2.4% constant currency sales growth is expected.While the price-to-earnings multiple of 19 remains in line with the three-year average for Burberry, UBS clearly thinks this is too expensive and retains a neutral rating with the stock trading at a 20% premium to the European luxury sector.By 11:20 on Friday morning, shares were trading 1.32% down at 1,564p.BC