DZ Bank cuts fair value for Hugo Boss to 43 euros - 'Hold'

DZ Bank lowered its fair value for German fashion house Hugo Boss to 43 euros from 50 euros previously, citing expectations of a weaker consumer sentiment in the coming quarters.

The bank kept its "hold" rating on the stock, saying it sees limited upside potential in the near term. Hugo Boss shares were down 2.6% at 39.68 euros in early Frankfurt trading.

DZ Bank analyst Silvia Quandt said in a note to clients that the bank expects weaker consumer sentiment in the coming quarters due to the ongoing war in Ukraine and the associated high inflation. This could lead to a slowdown in sales growth for Hugo Boss, particularly in Europe, she said.

Quandt also noted that Hugo Boss is facing increasing competition from other luxury brands. "We believe that Hugo Boss needs to invest more in marketing and product innovation to maintain its market share," she said.

DZ Bank's fair value cut comes after Hugo Boss reported a 3% increase in sales in the first quarter of 2023. The company said it was seeing strong demand in the Americas and Asia, but that sales in Europe were weaker due to the war in Ukraine.

Hugo Boss shares have underperformed the broader market in recent months. The stock is down about 20% year-to-date, while the DAX index of German blue-chip stocks is up about 10%.

DZ Bank is not the only analyst to cut their price target for Hugo Boss recently. In April, UBS lowered its target to 45 euros from 52 euros, citing similar concerns about weaker consumer sentiment.

Despite the recent downgrades, some analysts remain bullish on Hugo Boss. In May, Jefferies raised its target to 55 euros from 50 euros, saying the company is well-positioned to benefit from the recovery in global travel.