HM B: Margin Pressure Will Likely Hinder Durable Share Price Recovery

Narrative Update: H & M Hennes & Mauritz Analyst Price Target

Analysts have modestly increased their price targets for H & M Hennes & Mauritz. New valuations raise the fair value estimate by approximately SEK 2 to SEK 149.78, reflecting updated profit margin forecasts and adjustments in discount rates.

Analyst Commentary

Recent adjustments in price targets for H & M Hennes & Mauritz reflect a diversity of perspectives among analysts. Their commentary highlights evolving optimism tempered with continued caution on several important financial and operational fronts.

Bullish Takeaways

• Bullish analysts are raising price targets following improvements in profit margin forecasts, which suggests growing confidence in the company’s ability to manage costs efficiently.
• Upward revisions point to expectations of stable or accelerating revenue growth, supported by ongoing market presence and strategic initiatives.
• Valuation increases indicate positive sentiment regarding the company’s long-term execution and potential recovery in consumer demand.
• The narrowing gap between past and current price targets highlights perceived progress in addressing previous business challenges.

Bearish Takeaways

• Bearish analysts maintain cautious ratings despite modestly higher price targets, citing concerns over lasting margin pressure and intense sector competition.
• There is lingering skepticism about the company’s ability to deliver sustainable long-term growth, particularly given macroeconomic uncertainties.
• Some analysts express reservations about whether recent operational improvements can be maintained over multiple quarters.
• Current valuations remain below recent trading highs, reflecting apprehension about the pace and durability of the company’s recovery trajectory.

What's in the News

• H&M launched The Style Shop, Curated by Maison Black, an in-store experience spotlighting Black designers and entrepreneurs at select locations nationwide. The initiative begins at the new store at The Original Farmers Market in Los Angeles and will continue in Houston, Chicago, and New York City. (Client Announcements)
• The H&M Atelier Autumn-Winter 2025 collection, featuring modern, layered essentials and tactile fabrics, will be available in select stores and online starting October 2, 2025. (Product-Related Announcements)
• H&M completed the repurchase of 1,100,000 shares from June 26 to August 31, 2025, for SEK 149.42 million. This accounts for 0.07% of the total shares. (Buyback Tranche Update)
• In partnership with Arvind Limited and Deven Supercriticals, H&M Group supported the inauguration of India's first supercritical CO dyeing machine. This technology drastically reduces water, energy, and chemical usage in the textile process, supporting the company's sustainability goals. (Strategic Alliances)
• H&M opened a new flagship store at The Original Farmers Market in Los Angeles, debuting a curated shopping format and advanced technology features. Additional store openings are planned in the Los Angeles area and Las Vegas. (Business Expansions)

Valuation Changes

• The Fair Value Estimate has risen slightly from SEK 147.57 to SEK 149.78, reflecting updated forecasts.
• The Discount Rate increased marginally from 6.68% to 6.78%, pointing to a modestly higher risk assessment.
• Revenue Growth forecasts edged down very slightly, from 2.19% to 2.19%.
• The Net Profit Margin improved minimally, moving from 6.48% to 6.48%.
• The Future P/E multiple has risen modestly, from 17.92x to 18.24x, indicating slightly higher future earnings expectations.