UBS downgraded French luxury goods maker Hermès International to "sell" from "neutral" on Monday and cut its 12-month price target to €1,168 from €1,695, saying the brand's growing scale is reducing scarcity and making demand more cyclical. The bank cut its earnings-per-share estimates for 2026, 2027 and 2028 by 1%, 10% and 11%, respectively, citing weaker sales, lower benefits from scale and a higher assumed long-term tax rate of 33%, up from 28.5%. Its 2027 EPS forecast of €43.98 is 11% below consensus of €49.22, while its 2028 forecast of €46.53 is 14% below the €53.98 consensus. UBS expects Hermès' 2027 operating margin to fall to 38.3%, down 100 basis points from the prior year, and forecasts 5% organic sales growth in 2027, including 7% growth in leather goods. For third-quarter results due on Oct. 22, UBS expects sales of €4.1 billion, up 5% organically, with leather goods sales up 10%, silk and textiles up 8%, other activities up 7%, ready-to-wear and accessories up 1%, while watches and beauty decline 5%.
Hermes International SCAUBS downgraded Hermès to sell and cut its price target to €1,168, slashing 2026-2028 EPS estimates on weaker sales and margin outlook.
UBS Group AG