ABG Sundal Collier raises its recommendation for H&M to buy from sell.
H&M’s profits have taken a beating by the tough competition the last few years, but also to unfavourable weather conditions and weaker collections has affected. If the latter two factors would be normalised, the company will deliver a clear improvement in comparable sales and gross margin in 2017.
that is The opinion of ABG Sundal Collier in a analysuppdatering where the recommendation for H&M has been raised from sell to buy, something the News agency Directly reported earlier on Friday.
“After the H&M in 2016, given the worst of the markdowns in several years, we see it as encouraging that the company now addresses one of their biggest problems by increasing the focus on its huvudvarumärke, something we believe has been overlooked in recent years, as H&M worked with to expand its product offering, launched new chains, and built up of the odr platform,” writes ABG.
the base Scenario gives a guide price of 310 dollars. But if earnings growth exceeds 20% by 2017 would investors be prepared to pay more than that and a more aggressive scenario (bull case) gives a target price of 370 dollars.
“With a higher comparable sales, fewer price reductions and a tighter cost control, we believe that H&M would be able to increase their earnings by as much as 22 per cent in 2017″, writes ABG.
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