On Monday, Stifel adjusted its outlook on Hugo Boss AG (BOSS:GR) (OTC: BOSSY) shares, reducing the price target to EUR56.00 from EUR63.00, while sustaining a Buy rating on the stock.
The decision comes as the firm revises its sales growth and earnings forecasts for fiscal years 2024 and 2025. The adjustment reflects a more conservative estimate due to anticipated challenges in the brick-and-mortar retail sector and potential operating leverage pressure on earnings before interest and taxes (EBIT) margin.
The firm now expects Hugo Boss to achieve a 4% increase in sales growth at constant rates, a slight decrease from the previously projected 5%. Additionally, the EBIT margin forecast has been set at 10.0%, which aligns with the lower end of the company's current fiscal year 2024 guidance range of 10.0% to 10.7%.
Stifel's updated EBIT forecast for fiscal year 2024 stands at approximately EUR436 million, nearing the lower limit of the company's provided EBIT guidance range of EUR430 million to EUR475 million.
For fiscal year 2025, the EBIT margin prediction by Stifel has been placed at 11.5%, falling short of Hugo Boss's target of a 12% EBIT margin. These revised projections indicate a more cautious outlook on the company's financial performance in the coming years, taking into account the potential headwinds facing the retail industry.
The adjustment in Hugo Boss's price target and earnings estimates by Stifel reflects the firm's response to the anticipated retail environment and its impact on the company's profitability. Despite the lowered forecasts, the Buy rating suggests that Stifel remains optimistic about the stock's potential for investors.
In other recent news, HUGO BOSS AG has reported a 6% rise in revenue, reaching over €1 billion in the first quarter of 2024. The company's EBIT also saw an increase of 6%, standing at €69 million, leading to an improved EBIT margin of 6.8%.
The growth was seen across all brands, regions, and consumer touchpoints, with the Americas leading the regional growth with an 11% revenue increase. Despite the absence of specific initiatives to control operating expenses and no plans for mergers and acquisitions in 2024, the company maintains its optimism for the full-year outlook.
It expects a continued growth and acceleration of cash flow generation, forecasting revenue growth of 3% to 6% and EBIT growth of 5% to 15%. HUGO BOSS also aims to further reduce inventories by 2025. These are some of the recent developments in the company.
InvestingPro Insights
In line with the recent analysis by Stifel, InvestingPro data supports a nuanced view of Hugo Boss AG (BOSS:GR) (OTC: BOSSY). With a market capitalization of $3.07 billion and a P/E ratio standing at a modest 10.85, the company presents an interesting value proposition. Notably, the company's gross profit margin for the last twelve months as of Q1 2024 remains robust at 61.5%, underscoring its ability to maintain profitability in a challenging retail landscape.
InvestingPro Tips highlight that Hugo Boss has raised its dividend for three consecutive years and has maintained dividend payments for 33 consecutive years, which may appeal to income-focused investors. Additionally, with liquid assets exceeding short-term obligations, the company's financial health appears stable in the near term. However, it is worth noting that the stock has experienced significant pressure, trading near its 52-week low and taking a substantial hit over the last six months.
For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available, which can be accessed with the exclusive code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These tips could provide further guidance on whether Hugo Boss's current valuation and its potential for resilience in a tough retail market make it a worthwhile addition to an investment portfolio.
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