Investing.com – Despite a challenging environment for the luxury market, Prada SpA (HK:1913) (OTC:PRDSY) posted better-than-expected growth in the second quarter, standing out from its competitors and convincing Jefferies analysts to upgrade the stock to “Buy” with a target price of 67 Hong Kong dollars, approximately 17% higher than the closing price of 56.40 HKD on July 31.
Specifically, the investment bank's experts were impressed by the brand's resilience, which saw retail sales increase by 4.6% in the second quarter, and the exceptional performance of Miu Miu, which grew by 95.4% during the period, well above market expectations of +65.9%.
Additionally, strong regional performance in Europe and Japan was able to offset a slowdown in demand in China, with the EBIT margin increasing to 22.6% despite a 12% rise in operating expenses. Jefferies also highlights that the net liquidity of €265 million, compared to €283M last year, is a positive sign, especially considering the approximately €400M in freehold purchases in the second half of last year.
These data points lead analysts to be optimistic about Prada's future. "The ingredients are in place for ongoing dd top-line growth and margin expansion," explain Jefferies experts in their report, expressing confidence that the group will continue to grow in the future, relying not only on the excellence of the Prada brand but also on the increasing appeal of Miu Miu.
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