H&M Gains as BofA Raises Stock to Buy on Potential Sales Revival
Hennes & Mauritz AB, (HMB) Europe’s second-largest clothing retailer, rose the most since January in Stockholm trading after Bank of America Merrill Lynch raised its recommendation to buy in anticipation that same-store sales growth will resume.
The shares advanced as much as 3.8 percent in the Swedish capital, the steepest intraday gain since Jan. 15.
Same-store sales will probably start growing again in the second half of this year, Bank of America Merrill Lynch analysts Richard Chamberlain and Aurelie Caspar wrote in a note.
New store formats such as & Other Stories and COS support the long-term growth potential of the Stockholm-based retailer, as do expansion into newer, fragmented apparel markets worldwide, the analysts said. H&M’s valuation should be underpinned by moves to catch up online, they also said.
“H&M has been investing heavily online and we expect it now to catch up starting with its U.S. launch in August,” the analysts said. “There should be pent-up demand in the U.S. as H&M has reached critical mass there.”
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