Deutsche Bank has downgraded Burberry Group PLC (LSE:BRBY) to 'hold', arguing that much of the turnaround story is already reflected in the share price following a stronger-than-expected end to its financial year.
Analyst Adam Cochrane said early signs of brand recovery are encouraging, but further upside now depends on more ambitious execution.
That could mean pushing sales into double-digit growth or lifting profit margins above mid-teens levels by 2028.
The price target has been raised to 1,000p from 900p, just ahead of the most recent close at 967.6p.
Burberry has made progress under chief executive Jonathan Akeroyd and creative director Daniel Lee, particularly in reviving its heritage ranges.
But Deutsche Bank wants to see that success spread more broadly across the brand before recommending the shares again.
The bull case suggests the stock could climb as high as 1,500p, but that would require clear evidence the strategy is delivering across the board.
Cost-cutting applauded
Burberry shares jumped 17% on Wednesday after the company unveiled a fresh round of cost-cutting measures, as full-year sales came in slightly ahead of muted expectations.
The luxury brand said it would cut around 1,700 jobs, about 20% of its global workforce, as part of a restructuring programme aimed at saving £100 million by 2027.
Most of the roles affected will be office-based, along with some retail and manufacturing posts, including at its Castleford trench coat factory.
The cuts came alongside a slowdown in sales, which fell 12% over the year to £2.46 billion. The Americas, which had shown strength earlier in the year, weakened in the final quarter, while Asia-Pacific remained soft.
In morning trading on Thursday, the mood remained upbeat with the shares up a further 1.2% at 979.2p.