RBC keeps 'outperform' on Burberry ahead of Q3 update

(Sharecast News) - RBC Capital Markets has reiterated its 'outperform' rating for Burberry ahead of a third-quarter trading update later this month, saying the stock could benefit from a valuation rerating if the British luxury brand delivers against consensus expectations. The broker has pencilled in retail revenues of £658m for the final three months of 2025 (Burberry's fiscal third quarter), representing 0% reported growth but 2% growth on a like-for-like basis.

RBC expects growth of 3% in Greater China, 2% across the Americas, 1% across Asia Pacific excluding China and a flat performance across the EMEIA division.

If Burberry can deliver on this, results "would be well received and would set the stock up strongly for early cal 2026", according to RBC.

"In our view, given the early phase of Burberry's turnaround, we believe absolute revenue estimates are equally important to growth rates, and we also expect a material improvement in the 'quality' of revenues given non recurrence of one-off inventory clearance activities in the prior-year period," RBC said.

"Key focus will likely be on current trading trends and extent of impact of new offer, price and brand positioning on traffic and other retail KPIs in our view."

The broker, however, has lowered its reported net income and earnings per share estimates for Burberry by 9% to reflect £50m of restructuring costs flagged at the interim results in November. Nevertheless, all adjusted forecasts have been left unchanged.

RBC left its 1,400p target price for the stock unchanged, though shares in the luxury company were down 2.4% at 1,327.50p by 0908 GMT.