PPR SA (PP) fell in Paris trading after Morgan Stanley downgraded the stock on concern its Gucci unit will underperform luxury peers in 2012 and continued challenges at sporting-goods maker Puma will weigh on profitability.
PPR declined as much as 2.8 percent to 123.25 euros, the lowest intraday price since Feb. 23, and was trading at 123.4 euros as of 11:56 a.m.
“The shares will struggle to outperform until we see clear signs that PPR is progressing towards its long-term vision of becoming a luxury/lifestyle conglomerate and overcoming the challenges to making a faster exit from the slow growth and low margin non-core retail assets,” Louise Singlehurst, an analyst at Morgan Stanley in London, wrote today in a note, lowering her rating on the stock to underweight from equalweight.
Gucci’s revenue growth slowed in the fourth quarter, while Puma may need further investment to regain its competitive stance, according to Singlehurst.
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