Morgan Stanley Boosts H&M Rating After Q1 Earnings Exceed Expectations

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H&M Hennes & Mauritz AB B (ST:HMb) has received yet another upgraded outlook from analysts after the global fashion brand reported a Q1 profit that surpassed expectations. The Swedish firm’s improved margins were cited as the reason for the increased rating by Morgan Stanley analysts, who raised their rating from underweight to equal-weight.

This upgrade is the latest in a string of positive outlooks for H&M, with Credit Suisse and Danske Bank analysts also recently upgrading their ratings for the stock.

H&M reported an unexpected income of SEK 725 million (equivalent to $70.5 million) for the three months ending on February 28, 2023. This exceeded estimates from Bloomberg which had predicted a loss of SEK 1.03 billion.

While quarterly gross margins dipped to 47.2% compared to the same period in 2022, due to increased purchasing costs and a strong U.S. dollar, this figure still surpassed projections of 45.8%. Meanwhile, sales rose by 3% YoY on a local currency basis to SEK 54.87B, but fell short of Bloomberg forecasts of 4.21%.

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