HM B: Future Margin Gains Will Prove Insufficient To Justify Current Pricing

The analyst price target for H & M Hennes & Mauritz has edged up slightly to SEK 150.74 from SEK 150.65, as analysts factor in modest improvements in profit margins that more than offset slightly softer revenue growth expectations.

Analyst Commentary

Recent Street research shows a mixed stance on H & M Hennes & Mauritz, with some upward price target revisions offset by renewed caution from more skeptical voices. The latest changes highlight ongoing debate around the companys ability to sustain margin gains while reaccelerating top line growth.

Bullish Takeaways

• Bullish analysts have inched up their price targets, signaling incremental confidence that margin improvement initiatives can support a moderately higher valuation multiple.
• Upward target revisions suggest growing conviction that operational execution, including cost control and assortment optimization, is tracking ahead of prior expectations.
• The modest target upgrades indicate that, even with tempered revenue assumptions, improved profitability can underpin steady earnings per share growth.
• Bullish views imply that near term volatility in sales trends is manageable if the company continues to deliver on efficiency and inventory discipline.

Bearish Takeaways

• Bearish analysts have cut their price targets, arguing that the risk reward profile remains unattractive relative to peers despite recent margin progress.
• Target reductions reflect concerns that structural pressures in fast fashion and competitive intensity could cap long term growth and weigh on valuation.
• Skeptical views emphasize that current profitability gains may prove cyclical rather than structural, limiting upside to consensus earnings estimates.
• The persistence of Sell and Underweight ratings points to ongoing doubt about the companys ability to consistently balance margin expansion with sustainable revenue growth.

What's in the News

• H&M launches a 28 piece holiday capsule collection with luxury ski brand Perfect Moment, offering fashion forward apres ski outerwear, knitwear and accessories that blend performance skiwear with city ready style (Client announcement)
• The company debuts The Style Shop, Curated by Maison Black, an in store concept spotlighting Black designers and entrepreneurs across select US locations, starting at H&M's new Los Angeles store and rolling out to Houston, Chicago and New York City (Client announcement)
• H&M unveils its Atelier Autumn Winter 2025 collection, a modern winter wardrobe of elevated essentials in tactile fabrics and an autumnal palette, set for release in select stores and online from October 2, 2025 (Product related announcement)
• H&M completes a share buyback tranche, repurchasing 1,100,000 shares, or 0.07% of its share capital, for a total consideration of SEK 149.42 million under the program announced on June 26, 2025 (Buyback update)

Valuation Changes

• Fair Value has risen slightly to SEK 150.74 from SEK 150.65, reflecting a marginally higher intrinsic value estimate.
• Discount Rate has increased modestly to 6.91% from 6.76%, implying a slightly higher required return and marginally more cautious risk assessment.
• Revenue Growth assumptions have been trimmed slightly to 1.91% from 2.20%, indicating a more conservative outlook for top line expansion.
• Net Profit Margin expectations have improved slightly to 6.59% from 6.49%, signaling modestly stronger anticipated profitability.
• Future P/E has edged down marginally to 18.27x from 18.30x, suggesting a nearly unchanged valuation multiple on forward earnings.