Morgan Stanley cuts Hugo Boss to 'equal-weight' on subdued demand backdrop
** Morgan Stanley cuts German fashion house Hugo Boss BOSSn.DE to "equal-weight" from "overweight", citing demand backdrop to remain subdued
** MS does not expect Hugo Boss to be immune as it expects the difficult demand backdrop to weigh on the company's B&M retail sales and likely trigger heightened opex deleverage, despite a solid management team, ongoing brand momentum in the wholesale channel and self-help margin efficiencies
** "While we are admittedly late to downgrade to "equal-weight" and the stock has already been under meaningful pressure YTD and valuation is now supportive, we still prefer to move to the sidelines for now as we await further clarity on retail sales momentum into H2," the broker says
** It continues to prefer more defensive stocks in the sector such as EssilorLuxottica ESLX.PA, Hermes HRMS.PA, or those with strong group momentum like Prada 1913.F
** MS expects Hugo Boss' growth to slow to flat constant-currency growth in Q2, as the broker sees it as increasingly tough for Hugo Boss to accelerate on a YoY stack amid a tough macro demand backdrop and normalisation in demand as outlined by peers, especially in key markets such as the UK, China and the US
** "Given near term positioning, the stock could also easily suffer from a short-interest squeeze," it adds
** The stock, which has lost 41.2% YTD, falls 0.6% and is among the worst performers of Germany's mid-cap index .MDAXI
Reporting by Ozan Ergenay
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
