Hennes & Mauritz AB rose the most in more than a month in Stockholm trading as Credit Suisse AG said it expects like-for-like sales and profit margins to improve at Europe’s second-biggest clothing retailer.
The shares gained as much as 1.8 percent to 246.7 kronor, their steepest intraday increase since July 4 and the highest price since Sept. 26. The stock added 1.5 percent to 245.9 kronor as of 11:09 a.m. local time, with trading volume at 35 percent of the daily average in the past three months.
“Negative like-for-like sales over the past two years, averaging -1.1 percent, have been less due to company-specific issues than weak consumer demand and adverse weather,” Credit Suisse said in a note today. “These should now reverse/normalize and we forecast average like-for-like sales of 3 percent over the next six months.”
H&M reported a 4 percent drop in sales in comparable units in the first six months of this year. In June, that trend was reversed when revenue at stores and operations open at least a year rose 3 percent, compared with a year earlier.
Credit Suisse raised its rating on H&M to neutral from underperform today and lifted its 12-month share-price estimate to 240 kronor from 175 kronor. The bank said it forecasts profit margins to improve 90 basis points in the coming two years and increased its earnings per share forecasts by 2.6 percent for the fiscal 2013/14 and 5 percent for 2014/15.
“Having lost 550 basis points of Ebit margins between 2010 and 2013, there should be potential to rebuild mark-down as like-for-like sales turn positive.” the Swiss bank said.