Burberry has lost a backer in RBC Capital Markets, which downgraded the British luxury group and cut its price target after warning that demand for high-end goods is cooling.
The bank moved its rating to "sector perform", meaning it expects the shares to track the wider luxury sector, from "outperform", and lowered its target to £12 from £14.
In morning trading the stock was changing hands for £10.41, up 1.5%.
Analyst Piral Dadhania said Burberry was executing well, pointing to improved product ranges and better in-store displays for scarves, trench coats and cashmere.
He praised the group's focus on its heritage in outerwear and accessories.
The issue, in RBC's view, is the wider backdrop.
It believes luxury demand weakened over the summer and will stay challenging into 2027, squeezing both sales and margins.
RBC also flagged a particular weakness: Burberry relies more on selling extra items than on raising prices, unlike peers such as Prada and Dior.
That leaves it with less of a cushion when shopper numbers slow, the bank argued.
RBC now expects organic revenue growth of around 3% a year through to 2029, down from a previous 5%.
It trimmed its earnings forecasts and now sits 7% below consensus for the 2028 financial year and 11% below for 2029.
The bank described City hopes of 6% revenue growth and sharp margin gains as too optimistic.
Even so, RBC has not turned bearish, keeping faith in the turnaround under the Burberry Forward strategy launched in late 2024.
The shares trade on about 22 times forecast earnings, roughly in line with the luxury sector.
In a gloomier scenario, the bank sees them worth £8, while a stronger recovery could push them to £15.
