Burberry Group plc (LON:BRBY) is likely to benefit from an investment in the luxury fashion retailer by Belgium’s richest, Barclays said today.
It emerged earlier this month that activist investor Albert Frere, worth an estimated £3.9bn, had taken a 3% interest in Burberry via his Groupe Bruxelles Lambert (GBL) investment vehicle.
Barclays has reiterated an ‘overweight’ rating and raised its target price to 1,900p from 1,760p.
“We raise the price target to 1900p based on 21x calendar year 2018 price-earnings ratio in line with rising sector average, with the group benefiting from the recent stake acquired by GBL.”
The bank said Burberry has also strengthened its management team with the appointment of Marco Gobbetti as chief executive and Julie Brown as chief financial officer. Gobbetti and Brown joined the trench-coat maker in January.
In January, Burberry published its executive share plan which Barclays said suggests the new management team needs to achieve pre-tax profits in fiscal year 2019 at 10% ahead of the current Reuters consensus in order to trigger share awards.
“The target vesting level (50% of maximum payout) would require a 15% increase, while the maximum payout would need a pre-tax profit performance 23% ahead of current consensus.
“These targets would leave the group trading on 18.3x, 17.6x or 16.3x fiscal year 2019 (to March) price-earnings ratio and suggests 14% to 21% two-year compound annual growth rate from fiscal year 2017.”
Shares in Burberry rose 0.35% to 1,781p in early trading.