Hermes stock target lowered at Citi on continued China weakness

Investing.com -- Citi cut its price target on Hermes to 1,540 euros from 1,689 euros and kept a Neutral rating on the stock in a note on Wednesday, citing “continued demand weakness in China and a softer backdrop in France.”

The bank trimmed its forecasts ahead of the luxury group's third-quarter sales. It expects trends in other regions to remain broadly in line with the second quarter.

Citi lowered its second-half growth assumption for leather goods at constant currencies by half a percentage point. Even so, it still forecasts double-digit growth in the division, at 10% in the third quarter and 11% in the fourth, supported by volume growth of close to 6%.

Growth in non-leather goods was cut to 3% from 4% for the second half. Citi pointed to further weakness in aspirational categories over the summer.

The bank trimmed its group sales forecasts for 2026, 2027 and 2028 by about 0.5%. It now expects constant-currency growth of 6.4% in 2026, down from 6.8%. Hermes grew 6.1% in the first half.

With gross margin and operating cost assumptions broadly unchanged, Citi cut its operating profit and earnings per share estimates for all three years by about 1%.

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