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Investing.com - Morgan Stanley lowered its price target on Hermes International (HRMS:FP) (OTC:HESAY) to EUR1,930.00 from EUR2,280.00 while maintaining an Equalweight rating.
The firm reduced its EBIT estimates over the 2026-28 cycle by approximately 4% following the luxury goods maker’s first quarter 2026 sales results.
Morgan Stanley noted the stock declined more than 10% after Hermes reported a 180 basis point operating sales growth miss in the first quarter of 2026. The stock is currently trading at $191.88, near its 52-week low of $183.24, with shares down over 20% in the past year. Despite the recent pressure, InvestingPro analysis suggests the stock remains undervalued at current levels.
The firm expects Hermes shares to remain under pressure as the valuation multiple is unlikely to expand materially. The new price target implies a mid-30s price-to-earnings multiple on 2027 earnings. The company currently trades at a P/E ratio of 38.2, and InvestingPro Tips highlight that Hermes is trading at a high earnings multiple—one of 14+ exclusive tips available to subscribers.
Morgan Stanley said the results are likely to fuel further debate about whether Hermes’ top-line deceleration is cyclical or structural in nature, noting that growth is now essentially driven only by handbags.
In other recent news, Jefferies has upgraded Hermes International’s stock from Hold to Buy. The investment firm also raised its price target for Hermes to EUR 2,400.00, up from EUR 2,250.00. Jefferies cites a stronger outlook for luxury consumer demand as a key reason for this upgrade. Additionally, the firm notes that Hermes is poised to benefit from what it describes as "the 2025 quality compounder derating." These developments reflect Jefferies’ positive assessment of Hermes’ future prospects. Investors may find this upgrade significant as it suggests increased confidence in the company’s growth potential.
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