Financial Trading Blog
Stock of the day 13/04/2016 – Burberry Group PLC
Things admittedly started poorly for Burberry, touching a near 3 and a half year low of £10.49 in the first week of January. However the company’s stock price began to tick up as the month went on, namely thanks to a decent third quarter trading update. With overall sales rising by 1% to £603 million for Q3, a return to growth in China helping overcome a wince-worthy 20% fall in Hong Kong-trading (those two market making up the majority of the company’s revenue), investors were suitably impressed, enough to send the stock back above £12 as February began.
(Source: IT-Finance.com 13/04/2016)
Despite a few wobbles by the start of March Burberry had climbed all the way back to £13.50, its highest point since the previous November. The company received an even bigger boost soon after that high, talk of a takeover bid from an anonymous investor sending the stock to the £14.60s, a 5 month peak. Yet those rumours soon turned out to be false, HSBC revealing that it was multiple clients, not one big bidder, sending the stock higher, causing Burberry to plunge back below the £14 mark. That news did take the wind out of the company’s sales as March continued, though since the start of April things have picked up, Burberry sitting at a current trading price of £13.35 (IT-Finance.com, 13/04/2016).
In terms of its full year report on Thursday, the company announced in January it expects its pre-tax profit to come in at £428 million, a 6.1% decline year-on-year but arguably better than Burberry could have expected at points during the last 12 months. Perhaps more importantly investors will be looking for an update on the situation in Asia, especially the sales-haemorrhaging Hong Kong region.
Burberry Group PLC has a consensus rating of ‘Hold’ with an average target price of £14.56.
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