Hermès shares are up nearly 1% and have gained around 12% since the start of the year.

Stifel has raised its EBIT forecast for Hermès for the 2022-2023E financial year by 1-2%, ahead of the 2022 results due on February 17.

' This slight increase is largely due to organic sales growth and slightly higher margin assumptions ' says the analyst.

Stifel raises its price target to E1,500 and confirms its recommendation to Hold, which implies a target P/E of 40x for 2024, well in line with the average P/E over the past 10 years.

' Its high valuation multiple is supported by best-in-class fundamentals and upside risks to the 2023 consensus from accelerating prices and the reopening of China ' explains the analyst firm.

' We now forecast operating profit of +17% in Q4 2022 (vs. +15% previously). In Asia-Pacific we expect +15% operating profit, which contrasts with recent declines in the region by companies such as Richemont, Burberry and Boss due to the COVID disruption in China.

Stifel now expects +12% gross operating profit for 2023 (vs. +10% previously) supported by high single-digit prices and the expected boost from the reopening of China and the recovery of Chinese outbound travel.

' We are now modeling an operating margin of 40.2% for 2023E, up 40 basis points from 39.8% in 2022E, which is not unreasonable for a luxury mega-brand generating over 11 billion euros in sales, with almost half of its sales coming from leather goods ' adds the analyst.

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