The owner of Yves Saint Laurent plans to make the luxury clothing designer a “mega-brand” - and some analysts are convinced they will.
Citigroup's Pavan Daswani advised clients on Thursday to buy the stock and said the share price could soar more than 40% to €740.
His broker note was published after a committee meeting held by the fashion brand yesterday, which focused primarily on the Saint-Laurent brand.
The company is due to host further updates on its Gucci and other retail brands later today.
Saint-Laurent accounts for about 15% of the fashion brand house’s group sales and underlying earnings, making it the second-largest brand sold by the clothing house beside Gucci, alongside a raft of other fashion brands including Balenciaga and Alexander McQueen.
Citi anticipates that Kering’s other non-Gucci brands will “increasingly matter” to its investment case, “exemplified by the remarkable transformation of Saint Laurent over the past decade”.
The investment bank said the company’s management “presented a detailed and convincing long-term plan which should turn it into a mega-brand".
Estimates for the Saint-Laurent brand in 2022 include the company closing in on its €3bn in sales goal and 30% underlying earnings margin. The brand has a medium-term target to generate €5bn in sales, which it seeks to achieve partly through new store openings.
The Kering group posted revenue of €17.6 billion in 2021 on a margin of 36.7%, increasing its net income by 47.7% to €3.18 bn.
It delivered earnings per share of €25.49 in 2021, a 48% year-over-year boost, according to data available on its website.
Kering’s shares are currently trading at €524.40.