RBC Capital Markets has upgraded Swiss luxury house Compagnie Financière Richemont from "sector perform" to "outperform" and boosted its price objective to CHF220 from CHF200. The dealer's decision follows Richemont's first-quarter fiscal 2027 revenue release and reflects what RBC describes as stronger-than-expected jewellery demand, a recovering watch segment and the beginning of a new phase of earnings growth.
Analyst revisions and forecasts
Following the sales update, RBC raised its earnings-per-share estimates by roughly 7%-9% and revised its revenue and profit forecasts upward. The broker now expects adjusted EPS to jump 21.2% in fiscal 2027 and to increase by a further 12.9% in fiscal 2028. These projections accompany an upgraded fiscal 2027 organic revenue growth forecast of 11.8% - up from an earlier 8% - a change driven largely by higher expectations for the group's Jewellery Maisons and Specialist Watchmakers.
RBC also increased its fiscal 2027 EBIT forecast to c5.58 billion, about 7% above its prior estimate, and raised its adjusted diluted EPS forecast to CHF7.46, likewise roughly 7% higher than its previous projection.
What underpins the upgrade
RBC pointed to Richemont's first-quarter fiscal 2027 top-line results as reinforcing the more bullish stance. Group revenue reached c6.33 billion, representing 20% growth at constant exchange rates. The Jewellery Maisons division grew revenue by 24% to c4.73 billion, a performance that surpassed sell-side consensus growth expectations of 13%, according to RBC.
The broker emphasised that jewellery growth accelerated on a two-year basis and that much of that strength reflected higher volumes, which RBC estimated contributed 11 percentage points of the gain. Price and mix were additional, smaller contributors.
RBC said Richemont's jewellery brands, particularly Cartier and Van Cleef & Arpels, are benefiting disproportionately from structural drivers supporting the jewellery category. Those drivers include wealth-creation effects, an increase in women's self-purchasing and delayed U.S. demand catching up. The broker also judged Jewellery Maisons to be outperforming softer luxury peers.
Margin dynamics and operating leverage
Historically, RBC noted Richemont's investment case had been led by revenue growth: sales grew at an 8% compound annual growth rate from fiscal 2023 through fiscal 2026, while reported earnings per share remained roughly in the CHF6-CHF7 range. That earnings flatness was attributed to margin pressures from raw-material costs, foreign-exchange transactional headwinds and tariffs.
RBC now expects operating leverage to materialise as FX transactional headwinds that depressed fiscal 2026 margins by about 300 basis points neutralise in fiscal 2027. The broker also models an easing of raw-material cost pressures, after estimating a roughly 260-basis-point headwind in fiscal 2026. Together, these changes are cited as key reasons RBC believes Richemont is entering a new earnings-growth phase.
Valuation and relative positioning
RBC observed that Richemont shares traded at approximately 26 times calendar 2027 earnings. The broker described that valuation as fair on a growth-adjusted basis and noted it is supported by what RBC considers the highest return on invested capital in its coverage universe, excluding Herm e8s. While revenue growth is likely to slow as year-over-year comparisons become tougher, RBC expects Richemont to continue outpacing much of the luxury sector.
Note: This report summarises RBC Capital Markets' published upgrade and forecast revisions for Compagnie Financi e8re Richemont on the basis of the company's first-quarter fiscal 2027 sales update and the broker's accompanying commentary.