Burberry Shares: ‘Potential Rewards Now Outweigh the Risks’

Citi analysts upgraded Burberry Group (LON: BRBY) shares to a “Buy” rating for the first time in 17 years in a note to clients Thursday, citing growing confidence in the luxury brand’s turnaround prospects. 

The upgrade, issued by analyst Thomas Chauvet, marks a notable shift in sentiment and helped Burberry shares close around 1% higher in Thursday’s session.

Chauvet, who had held a neutral view on the stock since the 2008 financial crisis, now believes that “potential rewards now outweigh the risks.” 

The reassessment comes after Burberry shares have fallen nearly 70% from their peak two years ago, reflecting challenges in repositioning the brand and broader weakness in luxury demand.

The stock is down over 37% in the last three months and over 24% this year.

The company’s recent struggles also resulted in it losing its FTSE 100 status in 2024. 

However, Chauvet noted that “whilst patience is needed,” the British label has “significant transformation potential over the next three years.”

Central to Citi’s optimism is the “Burberry Forward” strategy introduced by new chief executive Joshua Schulman. 

The plan focuses on strengthening global brand appeal and positioning Burberry more competitively in the luxury market. Chauvet suggested this initiative could lay the groundwork for long-term growth.

A promising trading update in January offered early signs of improvement. Investors will now look to Burberry’s upcoming results on May 14 for clearer evidence of momentum in the company.