HM B: Incremental Price Increases Will Fail To Offset Margin Pressure

H & M Hennes & Mauritz’s analyst price target has been raised slightly, with recent upward moves from SEK 120 to SEK 123, SEK 113 to SEK 115, and SEK 125 to SEK 130. Analysts cite gradual improvements in key financial metrics and outlook.

Analyst Commentary

Recent adjustments in price targets reflect a nuanced market outlook for H & M Hennes & Mauritz. Analysts have shifted expectations based on the company’s financial trends, valuation, and operational execution.

Bullish Takeaways

• Bullish analysts are encouraged by incremental increases in price targets, which signals rising confidence in the company’s near-term performance.
• Gradual improvements in underlying financial metrics are seen as a positive indicator for sustainable earnings growth.
• Stabilization in key markets is expected to support a more favorable revenue trajectory and profitability margins.
• Recent price target revisions suggest that H & M's management is making progress on strategic initiatives, contributing to improved sentiment around future execution.

Bearish Takeaways

• Some analysts remain cautious and maintain less favorable ratings such as "Underweight" or "Sell" despite modest price target hikes.
• Concerns persist regarding the company's ability to accelerate growth in a competitive sector, which could potentially limit upside.
• Bearish analysts highlight ongoing execution challenges and margin pressures that could cap valuation expansion in the medium term.
• Slow momentum in overcoming market headwinds is cited as a reason for restrained optimism, keeping valuations in check.

What's in the News

• H&M collaborates with luxury ski and lifestyle brand Perfect Moment to launch a 28-piece holiday season capsule collection featuring elevated outerwear and accessories for après-ski and city wear. (Client Announcements)
• The company announces "The Style Shop, Curated by Maison Black," an in-store initiative highlighting the work of Black designers and entrepreneurs in select H&M stores across key U.S. cities. The initiative starts at The Original Farmers Market in Los Angeles. (Client Announcements)
• H&M unveils its new Atelier Autumn-Winter 2025 collection, focusing on modern winter essentials with luxurious fabrics and a layered silhouette. The collection will be available globally in October 2025. (Product-Related Announcements)
• The company completed a share buyback, repurchasing 1,100,000 shares for SEK 149.42 million between June and August 2025. (Buyback Tranche Update)
• In partnership with Arvind Limited and Deven Supercriticals, H&M Group supports the inauguration of India’s first supercritical CO dyeing machine. This pioneering technology delivers significant water, energy, and chemical savings in textile dyeing. (Strategic Alliances)

Valuation Changes

• The Fair Value estimate has risen slightly from SEK 149.78 to SEK 150.65.
• The Discount Rate has decreased marginally from 6.78% to 6.76%.
• The Revenue Growth projection has increased modestly from 2.19% to 2.20%.
• The Net Profit Margin forecast has edged higher from 6.48% to 6.49%.
• The future P/E ratio expectation has risen slightly from 18.24x to 18.30x.