Burberry Group PLC (LSE:BRBY) is on track for “a brand turnaround” but still needs to improve its performance in the US before investors regain full confidence, analysts at Deutsche Bank have said in a note following the luxury fashion company's latest results.
The German bank's analysts kept a ‘hold’ rating on the FTSE 100-listed firm but increased their share price target to 2,450p from 2,310p.
“It is probably too early to gauge the success at this stage, and we suspect this is a harder environment to reposition the brand than we have seen in the past,” the analysts pointed out, noting that Burberry is expecting sales growth in the US of 14% for the current financial year.
“Compared to the biggest brands, the Burberry sales growth rate has been subdued but we believe the company is on the right track,” the Deutsche Bank analysts concluded.
The hike in Burberry’s share price target comes after it reported a 21% uptick in operating profits in its full-year results on Thursday.
A boom in Chinese sales helped drive sales in the fourth quarter, but if this boost is short-lived, it only furthers the importance of Burberry strengthening its US position.
Shares in the luxury brand dropped over 1% on Thursday on the back of the results and were down another 2.6% in early trading on Friday to 2,327p.
However, the last twelve months have been strong for the fashion house’s shares, with gains of around 46%.