On Monday, JPMorgan sustained its Underweight stance on Hennes & Mauritz AB (ST:HMb) (HMB:SS) (OTC: HNNMY) stock, with a consistent price target of SEK130.00. This decision follows H&M's second-quarter results for 2024, which were released last month and fell short of heightened expectations, causing the company's stock to decline. As of this year, H&M's shares have seen a 4% drop.
The performance gap between H&M and its key competitor, Inditex (BME:ITX), has been significant, with Inditex's shares surpassing H&M's by 19% year to date. JPMorgan's assessment identifies three primary concerns for maintaining the Underweight rating on H&M: a perceived lack of re-engagement by consumers with the brand, potential risks of increased markdowns if the company's targeted growth acceleration in the second half of the year does not materialize, and JPMorgan's own earnings expectations for the fiscal year 2024, which are 7% below the consensus and 18% below in the third quarter.
The firm's analysis suggests there could be further downward movement in H&M's stock price in the near term, based on the anticipation of negative earnings momentum. JPMorgan has placed H&M on negative CreditWatch while reiterating its Underweight recommendation, signaling caution regarding the retailer's upcoming financial performance.
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