Moncler shares target reduced due to lower sales growth assumptions

On Tuesday, Stifel, a financial services firm, adjusted its price target for Moncler SpA (BIT::IM) (OTC: MONRY) shares, a luxury fashion brand, to €64.00 from the previous €65.00.

The company’s stock rating remains at a “Hold” stance. The revision follows the first half of the year 2024 results, which prompted the analyst to revise Moncler’s sales and EBIT forecasts for the fiscal years 2024 and 2025.

The reduction in the price target and forecasts is attributed to anticipated slower retail sales growth for the Moncler brand in the second half of 2024, especially due to a tougher market environment in the Asia Pacific region. Despite a robust 19% growth in the first half of the year, projections have been adjusted to a 12% growth rate for the full fiscal year 2024.

The analyst predicts that Moncler’s EBIT margin will remain stable at 29.7% for the fiscal year 2024, consistent with the previous year’s margin of 30.0%. This outlook is based on the expectation that the company’s shift towards a direct-to-consumer (DTC) channel mix will lead to gross margin expansion.

Furthermore, the report anticipates an increase in selling expenses, which is expected to rise by a double-digit percentage. This increase is seen as a result of the company’s strategic focus on expanding its direct-to-consumer channels, which typically involve higher costs compared to wholesale channels.

In summary, while Stifel maintains a neutral position on Moncler shares, the firm anticipates that the luxury retailer will face challenges in the Asia Pacific market that may dampen its retail sales growth in the latter half of 2024. Despite these challenges, the company is expected to sustain its profit margins through strategic channel management.

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