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Inditex shares target raised by Jefferies on solid Q1 performance

EditorEmilio Ghigini
Published 05/06/2024, 13:44

On Wednesday, Inditex (BME:ITX:SM) (OTC: IDEXY), the parent company of fashion retailer Zara, saw its shares target increased by Jefferies, a global investment banking firm.

The new price target is set at €51.00, up from the previous €49.00, while the firm continues to recommend a Buy rating for the stock. This update follows Inditex's successful navigation through potential sales risks in the first quarter.

Inditex managed to overcome concerns that had been looming over its first-quarter performance. Investors had been wary about the potential for weather-related disruptions to sales and the challenge of comparing against strong sales in the previous year. Despite these factors, Inditex delivered a solid performance as it transitioned into the second quarter.

The earnings forecast by Jefferies has been slightly increased, with the firm noting a more modest upgrade momentum. However, it was highlighted that it is uncommon to find large-cap consumer discretionary companies that are achieving double-digit growth on top of already strong comparable sales from the previous year.

Inditex's price-to-earnings ratio for the calendar year 2025 is projected to be 21.8 times, which Jefferies suggests is a conservative estimate given the company's current performance trajectory.

This valuation presents what the firm sees as an attractive entry point for investors considering the stock's growth prospects. The adjustment in the price target to €51 reflects confidence in Inditex's continued growth and market position.

In other recent news, Inditex, the parent company of Zara, has been the subject of positive financial projections and strategic moves. Inditex reported a robust operating performance for the year 2023, with sales increasing by 10.4% and a 30% rise in net income to €5.4 billion.

The company also plans to invest heavily in the coming year, focusing on optimizing commercial space, enhancing online platforms, and expanding logistics capacities.

Financial research firm CFRA raised its stock price target on Inditex to EUR52.00, citing confidence in the company's earnings resilience over the medium term.

CFRA also anticipates that Inditex's adoption of a local sourcing business model will strengthen its gross margin in FY25 and enhance store sales productivity.

Meanwhile, HSBC (LON:HSBA) lifted its price target for Inditex to EUR51.00, citing an increase in the forecasted profit before tax for fiscal years 2025-26 and adjustments in their asset pricing valuation methodology.

These recent developments reflect analysts' confidence in Inditex's financial performance and strategic direction. Investors may be interested in the company's upcoming first-quarter results, which are expected to be announced in June 2024.

These developments, along with Inditex's commitment to sustainability and talent development, and a 28% dividend increase for 2023, suggest a strong future for the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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