(Bloomberg) -- Prada SpA’s optimism in the face of falling sales may finally be feeding through to the share price.
The Italian luxury-goods maker stayed positive even while reporting a 15 percent drop in first-half revenue last month, caused by weak Chinese demand and a terrorism-inspired drop in European tourism. This year is “a turning point” and Prada is on the path to sustainable growth in sales and earnings from as early as 2017, Chairman Carlo Mazzi said on a conference call.
Sales have improved recently and demand is outstripping supply for new Bibliothèque and Cahier handbags, Linda Huang, a Hong Kong-based analyst at Macquarie Group, wrote in a research note on Tuesday. She upgraded her recommendation on the stock to outperform, reversing the underperform recommendation the brokerage had held since at least 2014.
“Bibliothèque and Cahier are currently out of stock and customers are currently being put on a waiting list,” wrote Huang. “Popularity is restoring.” The Bibliothèque bags sell for more than 2,000 euros ($2,200), according to Prada’s website.
Prada shares jumped 5.7 percent to HK$25.90 in Hong Kong trading on Tuesday, the highest closing price since June 21. Huang’s new HK$33 price estimate for the stock implies a further 27 percent gain.
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