Broker snap: UBS slashes target for Burberry

16th Sep 2011 12:07

UBS has kept its neutral rating but cut its target price by 100p for British luxury brand Burberry after spending two days with senior management."Our main takeaway was that the company is in a structurally better position versus 2008 as it benefits from higher exposure to emerging market consumers, superior inventory controls, lower wholesale mix and a leaner supply chain," said analysts Fred Speirs and Eva Quiroga.Also, the analysts said that Burberry's "mutli-pronged investments and strategies being executed appear to be working well at driving store productivity without comprising brand equity."However, the broker maintains its cautious stance, saying that these structural improvements are factored into the price.The target price is scaled back from 1,550p to 1,450p on the back of a new target price-to-earnings ratio of 20 ("to reflect a blend of peak and mid cycle levels") and a 20% probability to the M&A premium.By 12:06 on Friday, shares were 1.92% higher at 1,485p.BC