Swatch & Richemond fuel European markets

Thursday, 02 February 2012

European shares looked optimist on Wednesday, spiked by renewed hopes on the Greek debt swap deal and headed by Swiss Swatch and Richemont, which topped the Switzerland’s stocks markets. Esprit´s stock rose on news of closure of its North American stores.

European shares climbed to a new six-month high on Wednesday, with expectations that a Greek debt swap deal will be agreed this week boosting banking stocks and better-than-expected Chinese manufacturing data supporting miners.

Traditional watchmakers led gains in the Swiss Market Index, headed by Swatch Group AG and Cie Financiere Richemont SA, as both climbed more than 3.5 per cent.  Reuters reported how Goldman Sachs reiterated its 'Conviction Buys' on Richemont and Burberry, saying valuations stayed undemanding for stocks with sector-leading growth and returns. Its 12-month price targets implied a 56 per cent upside potential for Richemont and 64 per cent for Burberry. Shares in the two companies rose 2.8 per cent and 3.8 per cent respectively.

Still in Europe, Yoox´s CEO Federico Marchetti raised his stake in the online retailer of fashion after exercising stock options, convinced of investors are undervaluing the company. As reported by Italian market regulator in a statement published Wednesday, Marchetti increased his holding in the Bologna-based company to 6.594 per cent from 4.785 per cent. On a fully diluted basis, the executive’s stake remains 11.083 per cent, reported Bloomberg. This makes of him the single largest shareholder, according to the company. Yoox shares have more than doubled since going public three years ago. Today, the distributor of brands such as Diesel and Valentino has a market value of 466 million euros (Rs 3,063 crores). The stock rose 3.4 per cent on Wednesday, closing around 8.80 euros (Rs 575) per share.

In Wall Street, Lululemon Athletica (LULU) was up 1.3 per cent in the wake of a price-target hike to $74 (Rs 3,692) from $68 (Rs 3,392) at Barclays. LULU has rallied more than 35 per cent so far in 2012, with the stock beating a steady path higher along the support of its rising 10-day moving average. There could be additional price-target boosts on the horizon for the equity, with Thomson Reuters pegging the consensus 12-month estimate at just $62.12 (Rs 3,099).

Meanwhile, Canadian apparel maker Gildan Activewear (NYSE: GIL) was upgraded by Zacks Investment Research from an “underperform” rating to a “neutral” rating in a research note issued on Wednesday. In the same vein, analysts at Scotia Capital upgraded shares of the retailer from a “sector perform” rating to an “outperform” rating in a research note to investors on Monday, January 23rd.

Finally, in a last attempt to recover its track back to profit, “Esprit is cutting losses in a tough market that it hasn’t been able to break into,” said Andrew Sullivan, principal sales trading at Piper Jaffray Asia Securities Ltd. in Hong Kong for Bloomberg. The Hong Kong-based retailer will close all its stores in North America

After going in a pricing roller coaster, the stock rose 1.1 per cent to HK$11.56 (Rs 74) at the close in Hong Kong trading Wednesday, fuelled by the news. It is worthy a note to remember that Esprit reported full-year profit plummeted 98 per cent to HK$79 million (Rs 50 crores) in September last year.

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