On Tuesday, Bernstein analysts increased the stock price target for Cie Financiere Richemont SA (SIX:CFR:SW) (OTC: CFRUY) to CHF190 from CHF145, while keeping an Outperform rating on the stock.
The adjustment follows a robust performance by the luxury sector, with Richemont shares experiencing a strong rebound on the back of surpassing financial forecasts. According to InvestingPro data, the stock has surged over 33% in the past year and is currently trading near its 52-week high of $17.96.
The luxury sector, having faced a period of downturn, has seen a resurgence, with Richemont at the forefront due to its strategic positioning. The company's focus on hard luxury items, sensible price adjustments, and ownership of some of the market's most sought-after luxury brands have positioned it favorably among investors and consumers alike. The company maintains impressive gross profit margins of 67.6% and has consistently paid dividends for 36 consecutive years.
Richemont's impressive results in the fourth quarter of 2024 have prompted analysts to revise their financial models. The updates include the latest third-quarter 2025 reported figures and adjusted expectations for the fourth quarter of 2025, reflecting the ongoing momentum.
Consequently, earnings per share (EPS) forecasts for fiscal years 2025 and 2026 have been raised by 4%, placing Bernstein's estimates 2% and 3% above the consensus, respectively. InvestingPro analysis reveals strong financial health with a current ratio of 2.52 and more cash than debt on its balance sheet. Subscribers can access 15+ additional ProTips and detailed financial metrics to make informed investment decisions.
The revised valuation of Richemont is based on a target relative price-to-earnings (P/E) multiple of 2.00, an increase from the previous 1.85 multiple. This change acknowledges Richemont's strengthened position within its category for the estimated fiscal year 2025 and the application of the "triple whammy rule," which suggests a rebound in demand following the third quarter of 2024, considered to be a low point.
With a current P/E ratio of 78.26 and high EBITDA valuation multiple, InvestingPro's Fair Value analysis suggests the stock may be overvalued at current levels.
Bernstein's analysts conclude that the revised price target of CHF190 reflects Richemont's robust performance and favorable prospects in the luxury market, as evidenced by the company's quarterly financial achievements and positive industry momentum.
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