Fashion

Ferragamo Stock Downgraded Despite Growth

Company's Revenues Grew By 27.6% In The Fist Nine Months

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Alessia Pirolo

America24, 15 novembre 2011, 11:23

Despite posting a strong performance for the first nine months of 2011, luxury leather goods brand Salvatore Ferragamo stock was downgraded by Deutsche Bank analysts from buy to hold and was losing 5.22 percent in Milan Stock Exchange on Tuesday. Deutsche Bank reduced Ferragamo target price to 12.5 euros from 12.6 euros per share.

In the third quarter of 2011Ferragamo continued growing double digit, thanks to strong growth particularly in Asian markets. The company earned 701.3 million euros for the first nine month of 2011, with an increase in revenues of 27.6 percent compared to the same period in 2010. Asia Pacific outperformed the group average with +36 percent in revenues thanks to China (+ 50 percent), while Japanese market was fundamentally flat. Net profit for the period was 78.3 million euros, up 85 percent compared to 2010. EBITDA increased, over the period, from 78.9 million euros to 132.4 million euros (+67.8 percent) and its incidence on revenues improved from 14.4 percent to 18.9 percent.

The “emerging market consumers” keep on driving the company’s revenues. In 2011, Ferragamo continued its expansion in Mainland China, with seven new openings up to September and other two stores yet to be opened by the end of the year. Mexico is now the top seven market for the group and the main driver of the Latin America upward trend.

Despite the good results, Deutsche Bank downgraded the stock, saying that the potential upside is limited. On the other hand, Mediobanca kept the outperform rating and increased its target price. "Ferragamo continues to be our preferred stock within our universe of branded goods companies. Its favorable product and geographic mix of sales should support positive earnings momentum and drive market consensus estimates up. We keep our outperform rating on the stock and increase our target price to 13.9 euros from 13.45 euros per share." Stated Chiara Rotelli, equity analyst for Mediobanca.

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