Citigroup raises Prada's target price to 53.8 yuan, maintains neutral rating

Citi published a research report indicating that Prada (01913.HK) experienced a slowdown in revenue growth to single digits in the second and third quarters, with the Prada brand recording negative growth for the first time since 2020; although the Miu Miu brand continues to grow faster than its peers, it is further normalizing.

The bank believes that the group still needs to invest heavily in advertising, manufacturing, IT infrastructure, and retail network expansion for the Miu Miu brand, which may suppress margin expansion, maintaining it at 23.6% in 2024, about 350 basis points lower than historical highs.

Based on the resilience of the Miu Miu brand, the bank raised its overall sales forecast for the group in 2025 by about 1% and lowered its forecasts for 2026 and 2027 by about 1% due to worsening unfavorable exchange rates. Given the normalization of operating expense growth, EBIT and earnings per share forecasts for 2025 to 2027 were raised by 3%, 1%, and 2%, respectively. The target price was raised from HKD 45 to HKD 53.8, maintaining a "Neutral" rating