H&M shines in Stockholm; analysts raise their forecasts ahead of the results

  (Il Sole 24 Ore Radiocor) - Hennes & Mauritz is shining on the Stockholm Stock Exchange thanks to favourable analyst forecasts ahead of its quarterly results. The Swedish clothing giant’s shares are, in fact, among the best-performing constituents of the Stoxx Europe 600. Citi has placed H&M on a 90-day watchlist for potential positive factors ahead of the publication of its third-quarter results and has raised its target price to 171 kronor, up from 158, whilst confirming its ‘Neutral’ rating.

Analysts at the US bank now forecast revenue growth, excluding currency fluctuations, of 0.8 per cent for the quarter, compared with the initial forecast of a 0.5 per cent fall, and have revised their gross margin forecasts upwards to 53.3 per cent, believing that the positive effects of exchange rates and internal measures should offset the negative impact of tariffs and rising transport costs. “We expect some cost inflation on a constant-currency basis, but we believe that cost control for the full year 2026 will be better than previously announced,” the research note states.

Citi also estimates that H&M could benefit from refunds of up to 1.5 billion kronor in respect of US tariffs . The quarterly results will be published on 24 September. Jefferies reiterates its ‘hold’ recommendation on H&M, whilst raising the target price to 160 kronor (from 154 previously), although it is less optimistic on certain fronts. According to Jefferies, H&M will report third-quarter revenue in line with expectations, but the group will be affected by continued pressure on profitability, and results are expected to fall short of consensus forecasts for the fourth quarter and the coming years.

The US broker forecasts that H&M’s like-for-like sales will grow by 1 per cent in the third quarter, in line with consensus estimates, and expects an operating profit of 4.91 billion kronor and an operating margin of 8.6 per cent. For the fourth quarter, operating profit is forecast at 5.58 billion kronor with a margin of 9.3 per cent, whilst the consensus estimate for operating profit is 6.22 billion kronor. Jefferies cites rising costs of raw materials, energy and logistics as negative factors.

In the medium term, changes to EU regulations on low-cost imports that are exempt from tariffs are expected to reduce the competitive pressure from Chinese platforms. Nevertheless, Jefferies’ earnings forecasts are around 6 per cent lower than the consensus estimates for next year and the year after. The bank also believes that the valuation, at around 22 times 2027 earnings, largely reflects a reduction in the free float rather than strong fundamentals.