Financial Trading Blog
Stock of the day 16/052016 – Burberry Group PLC
Having almost immediately hit a 39 month low of £10.49 Burberry was quick to turn things around as the New Year began, rising back above £12 by the start of February in part thanks to its post-Christmas third quarter update. With sales rising 4% in mainland China, and the group seeing a 1% jump in total revenue to £603 million, the company was tentatively put back on track, despite the lingering danger of a slowdown in Hong Kong.
(Source: IT-Finance.com 16/05/2016)
A bit of a wobble in the middle of February was then soon overcome as the month wrapped, and with rumours of a takeover circling around the markets Burberry hit a 5 month high of £14.68 as March got underway. Yet that chatter proved to be unfounded, the disappointment effectively sapping the stock of its pre-rumour energy.
Matters weren’t helped by the company’s second half update on the 14th April, which only served to accelerate the stock’s decline. Warning that ‘challenging’ market conditions in the coming fiscal year would continue to plague its growth Burberry posted a 1% fall in sales for the final 6 months of its trading year. Its wholesale business especially is set to suffer, the company forecasting a 10% drop for the current financial year.
Leaving investors with little reason to stick around Burberry has since struggled to stall its fall, and is currently trading at a 3 month low of £11.40 (IT-Finance.com, 16/05/2016).
In terms of Burberry’s preliminary results on Wednesday the company’s troubles are only set to continue. Analysts are expecting a 7% plunge in profits to £412.7 million, with revenues dropping a less precipitous £2 million to £2.52 million.
Burberry Group PLC has a consensus rating of ‘Hold’ with an average target price of £14.44.
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