UBS Sustains 'Neutral' Stance on PRADA, Trims Target Price to HK$37

Stock News05-04

UBS has issued a research report maintaining a "Neutral" rating on PRADA (01913). The firm has lowered its earnings per share forecasts for 2026 to 2028 by 3%, 2%, and 2% respectively. This adjustment accounts for a 50 basis point reduction in the projected organic sales growth for 2026 and an average 30 basis point decrease in the estimated EBIT margin. Consequently, UBS has revised its target price for PRADA downward from HK$39 to HK$37.

The UBS report indicated that PRADA's retail momentum in the first quarter of this year was weaker than anticipated. While overall organic sales grew by 3%, slightly exceeding the firm's expectations—primarily driven by a 17% increase in wholesale business—the retail trends fell short. Retail growth for the Prada brand and the Miu Miu brand was only 0.4% and 2% respectively, both below UBS's forecasts.

The report noted that commentary from management might offer some short-term confidence for the early part of the second quarter. However, UBS believes it is still premature to turn optimistic. The primary concerns cited are a significant slowdown in the growth rate of Miu Miu and cyclical worries surrounding the Prada brand amidst an increasingly competitive luxury market and geopolitical uncertainties.

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