Analyst Oliver Chen from TD Cowen maintained a Hold rating on Ermenegildo Zegna (ZGN – Research Report) and decreased the price target to $8.00 from $10.00.
Oliver Chen has given his Hold rating due to a combination of factors including the company’s recent financial performance and future prospects. Zegna’s EBIT for FY24 exceeded expectations, driven by strong gross margins and strategic marketing expense timing. However, despite positive trends in the U.S. and a solid response to the new TFF collection, there are concerns about negative trends in Hong Kong and China, which temper the optimism.
Additionally, while Zegna’s valuation is modest compared to its historical average and luxury peers, the company’s medium-term targets are constructive, aiming for significant sales and EBIT growth by FY27. The cautious outlook for Thom Browne, due to necessary merchandising changes and a projected decline in sales, also contributes to the Hold rating. Overall, while there are positive elements, the mixed regional performance and strategic challenges suggest a balanced approach, justifying the Hold rating.
In another report released on March 28, UBS also maintained a Hold rating on the stock with a $9.00 price target.