SRH AlsterResearch AG Initiation: Hugo Boss - Strong rebound becomes visible; Rating down to HOLD; PT up

Hugo Boss AG (Update) Retail MCap EUR 2.9bn HOLD (from BUY), PT EUR 40.00 (-5% potential) Research_update In Q1, Hugo Boss was able to limit the decline in sales to 10% (8% in constant currency). This is a clearly a success given the closure of around half of all shops in Europe, the most important market for Hugo Boss. The expansion of its online business (Fx adj. +72%) and China (Fx adj. +98%) provided support. We expect further sales potential in China as soon as several special effects have expired. Already in Q1, sales there were 29% higher than in Q1 2019. On group level, the Executive Board targets a doubling of sales in the coming second quarter. For H2, it also seems justified to be generally more positive as with an increasing vaccination success, stationary sales in the important tourist centers will also pick up again. Backed by a more positive view, we raise our price target from EUR 37.00 to EUR 40.00 which is derived by our FCF-yield model, and supported by our DCF-assumptions (DCF PT EUR 41.00). However, after the share price surged by more than 10% in light of a better-than-expected Q1, we switch our rating from BUY to HOLD, with a slight downside potential of 5%. For 5 current investment ideas, check our Weekly Screener. This week we are looking for companies that have the highest Return on Capital Employed (ROCE) Please note that AlsterResearch publishes MiFID II compliant research only. For a detailed discussion on MiFID II, please visit https://www.research-hub.de