Shares in luxury goods brand Burberry Group (BRBY.L) rise 1.6 percent after RBS upgrades its stance on the stock to “buy” from “hold” and turns more bullish on the company’s prospects beyond 2010/11.
RBS says the brand remains deeply under-developed, providing attractive opportunities for growth. The broker expects cost management and better sourcing to improve margins.
“Burberry has a solid balance sheet which allows it to continue with its retail expansion (of) 10-12 percent average space increase over the next three years,” RBS analysts say in a note.
They also say the company is an attractive takeover target, given its 100 percent freefloat and strong balance sheets of its largest peers.
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