Burberry Downgraded On Sales Underperformance

Burberry Group PLC was downgraded to reduce from hold at HSBC on the luxury brands top-line underperformance. HSBC cut the target price to 1,580 pence sterling (or $20.39) from 1,630 pence sterling (or $21.04). Analysts highlight the various measures that the company has taken, including a new stock buyback program and millions of pounds in cost savings. But, "all in, every shareholder-friendly initiative seems to have been looked at to enable Burberry shares to be protected in the absence of what, in our view, would be the only real solid booster: a sustainable rebound in sales growth," the Tuesday note said. Analysts believe Burberry will underperform its competition for longer than the market expects, and both the sales and earnings performance won't sustain the stock's valuation. Burberry shares are down more than 3% in Tuesday trading, but up 62.6% for the past year. The S&P 500 index is up 15.5% for the last 12 months.