Burberry Group PLC (LSE:BRBY) shares fell 2.4% to 1,145p on Friday after JPMorgan cut its rating to 'underweight', warning that hopes for a sharp improvement next year look too optimistic.
The bank said that while 2026 should bring a degree of stabilisation to the luxury sector after two turbulent years, the recovery is likely to be uneven.
It expects low single-digit growth across the industry, helped by easier comparisons, slightly firmer Chinese demand and fresher product ranges to counter consumer fatigue.
Even so, JPMorgan said polarisation between brands is set to remain high as shoppers stay selective and price/mix effects stay muted.
Against that backdrop, the analysts believe Burberry’s turnaround will take longer to show through than consensus assumes. In contrast, they kept Richemont as their top pick and maintained 'overweight' ratings on Brunello Cucinelli, Prada and Zegna.
Moncler was upgraded to 'overweight' and Ferragamo to neutral on improving momentum heading into year-end and better prospects for 2026.
JPMorgan remains cautious on Kering and Swatch, reiterating underweight ratings and placing Swatch on negative catalyst watch.
Outside luxury, it kept an overweight stance on EssilorLuxottica, highlighting an accelerating innovation pipeline expected to support double-digit growth next year.