Jefferies has raised its recommendation on Hermes International (EPA:RMS), moving the stock from Hold to Buy and lifting its target price to EUR2,400 from EUR2,250. Hermes shares are trading at $251.44, with the company holding a market capitalisation of $264 billion.
The broker framed the upgrade around what it describes as "a more elevated bias" in the luxury maker’s positioning and the aftermath of "the 2025 quality compounder derating." Jefferies pointed to the firm’s disproportionate exposure to consumers benefitting from rallying global equity prices as a central reason for a more upbeat stance.
Data highlighted by InvestingPro underpins parts of Jefferies’ view: Hermes reports gross profit margins of 70.3% and carries a "GREAT" financial health score of 3.07. At the same time, InvestingPro’s Fair Value model suggests Hermes may be somewhat overvalued on current metrics.
Additional company-level metrics cited include a price-to-earnings ratio of 49.8 and a record of uninterrupted dividend payments extending 32 consecutive years. Investors are focused on Hermes’ upcoming earnings announcement scheduled for February 12.
Jefferies’ coverage in the luxury and automotive corners of its remit remains selective. The firm preserved a Hold rating on Ferrari (NYSE:RACE) while trimming its price target to EUR300, noting continued caution regarding the automaker.
On the British luxury house Burberry (LON:BRBY), Jefferies said it still requires "more comfort" on how the Chapter 11 bankruptcy proceedings surrounding Saks could affect Burberry’s growth trajectory, and as a result maintained its Hold rating on the company.
Other broker views in the sector diverge. Barclays downgraded Hermes to Equalweight from Overweight and reduced its target price for the stock to EUR2,310 from EUR2,510. Barclays flagged that Hermes has delivered single-digit growth year-to-date and expects that pattern to continue into the fourth quarter, a dynamic that the bank said could dampen the stock’s attractiveness to some investors.
Separately, Bernstein identified Richemont as its top pick in the luxury goods sector for 2026. The firm highlighted Richemont’s strong standing in jewellery and noted improved capital allocation discipline. Bernstein projects a gradual recovery in the luxury market, estimating constant foreign exchange growth of approximately 5%, and expects a progressive U-shaped revival in China even as it observed some improving demand trends during the summer of 2025.
The constellation of analyst moves underscores a mixed landscape for luxury names: a Jefferies upgrade for Hermes, peer caution from Barclays and Jefferies alike on other industry names, and sector picks from other houses that favour different sub-segments of luxury.