DZ BANK adjusts Hugo Boss rating to 'Hold'

Announcement comes following the release of Hugo Boss' Q3 trading update

DZ BANK downgraded its recommendation on Hugo Boss to "Hold" from "Buy" in a research note published on Wednesday.

The German bank said the downgrade reflects its view that Hugo Boss shares are now fairly valued, having rallied significantly in recent months. DZ BANK also cited concerns about the impact of the ongoing COVID-19 pandemic on Hugo Boss's business.

Hugo Boss shares have gained around 40% since the start of the year, outperforming the broader German market. The stock is now trading at around €60, close to its all-time high of €63.50 reached in January 2018.

DZ BANK said it believes that Hugo Boss is a well-managed company with a strong brand, but it is concerned about the impact of the COVID-19 pandemic on the company's business. The bank noted that Hugo Boss's sales in China, a key market for the company, have been impacted by the pandemic.

DZ BANK also said it is concerned about the impact of the pandemic on Hugo Boss's profitability. The bank noted that Hugo Boss's gross margin has been declining in recent quarters, and it expects this trend to continue in the near term.

Despite the downgrade, DZ BANK said it remains positive on Hugo Boss's long-term prospects. The bank said it believes that Hugo Boss is a well-positioned company to benefit from the recovery in the global luxury market.

Other analysts have also downgraded their recommendations on Hugo Boss in recent weeks. Citigroup downgraded the stock to "Neutral" from "Buy" in a research note published on Tuesday. Barclays downgraded the stock to "Equal Weight" from "Overweight" in a research note published on Monday.