On Wednesday, Bernstein, a division of SocGen Group, upgraded shares of Burberry Group (OTC:BURBY) PLC (BRBY:LN) (OTC: BBRYF) from Market Perform to Outperform, increasing the price target to GBP9.30 from GBP6.80.
The upgrade reflects a positive outlook on the company's strategic direction, particularly with the appointment of Josh Schulman. Analysts at Bernstein believe Schulman's presence indicates a more grounded approach to product and pricing strategies.
The firm highlighted Burberry's distinctive brand identity, emphasizing its British heritage, iconic trench coats, and check pattern as foundational elements for a successful brand relaunch. The analysts are optimistic that Burberry's return to these core values will facilitate a quicker and more straightforward revival process.
Burberry's recent pricing strategy has also been met with approval. Department stores have noted the brand's pragmatic stance, especially in product segments like leather goods, where Burberry has traditionally had less credibility. By adjusting opening price points to more realistic levels, Burberry is expected to leverage the opportunity for growth.
In the context of the broader luxury goods market, Burberry is seen to benefit from the significant price increases of handbags by other leading brands following the Covid-19 pandemic. This situation has created room for Burberry to position itself advantageously as a price follower in the handbag segment, a move that analysts consider feasible and promising for the brand's future.
The upgrade by Bernstein suggests a confidence in Burberry's potential to capitalize on current market dynamics and its own brand strengths to drive growth and improve its market position.
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