Investing.com — Luxury goods maker Herm\u00e8s International remains well positioned for long-term growth despite a disappointing start to 2026, with investors likely to focus on signs of improving momentum when the company reports second-quarter results on July 29, according to Jefferies. <\/p>\n
The brokerage reiterated its Buy rating on the stock but lowered its price target to \u20ac2,000 from \u20ac2,400, citing continued mixed trends in China and a weaker-than-expected first quarter that shook confidence in the group’s ability to sustain its industry-leading growth and profitability. <\/p>\n
Jefferies said first-quarter organic sales growth of 5.6% surprised investors, with wholesale weakness, softer Middle East travel spending in Paris and sluggish Chinese demand weighing on performance. While the Americas posted strong 17.2% growth and Japan and Europe remained healthy, Asia excluding Japan grew just 2.2%, reflecting ongoing challenges in China. <\/p>\n
For the second quarter, the broker expects organic revenue growth of 6.9%, slightly below market expectations of 7.3%, driven by 11% growth in leather goods and 3.5% growth in non-leather categories. It forecasts first-half EBIT of about \u20ac3.29 billion, broadly in line with consensus. <\/p>\n
Jefferies noted several encouraging indicators ahead of the earnings release. The firm said Chinese quota spending for sought-after handbags appears to be recovering, Birkin auction premiums have improved globally, U.S. Google search interest in the brand has surged about 50% year-over-year in the second quarter, and global web traffic is running roughly 16% higher. <\/p>\n
The brokerage argued the stock’s valuation has become more attractive after a sharp derating. Shares now trade at around 33 times expected 2027 earnings, a significant discount to historical premium levels, suggesting investors are pricing in a prolonged slowdown in growth and returns. <\/p>\n
While Jefferies cut its sales and earnings forecasts for 2026-2028, it maintained that Herm\u00e8s remains one of the best-positioned luxury brands to benefit from rising wealth among affluent consumers, particularly in Asia and the United States, and expects upcoming results to help improve investor sentiment. <\/p>\n
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