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Strategic Buy Signal on Kering (KER-FR)

09/12/2021
We had an Enter Long Strategic signal on December 9, 2021, triggered by our system on Kering, KER-FR, the French Luxury Company.

Our system also triggered an Enter Long Tactical signal on November 29, 2021 that imply a likely bullish acceleration. Kering has a solid track record, with a Behavioral score of 10/10, therefore the bullish signal is to be considered as mainly Strategic.

Kering is a € 85.5 Bn market cap global luxury Group, which brings together and grows a set of emblematic houses in fashion, leather goods, jewelry and watchmaking including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ulysse Nardin, Girard-Perregaux, as well as Kering Eyewear.

At the end of 2020, the Group had a network of 1,433 directly managed stores located in Western Europe (313), North America (229), Japan (228) and emerging countries (663).

The market's focus is on Kering's flagship brand and its capital return plans. Gucci didn't do well in the recent Q3 2021 as sales were particularly weak in China. The new COVID-19 variant is a major risk (possibly leading to more restrictions in China), notwithstanding the fact that consumers' initial response to Gucci's new Aria collection introduced in September 2021 seems to be so far positive, that if confirmed could revitalize the brand.

Kering is expected to post a € 16.9 Bn revenue coupled with a 28% EBIT margin in 2021. The EPS growth is expected to reach 15% in 2022, boosted by revenue growth and margins expansion. The stock currently offers a 1.5% dividend yield.

Short term catalyst : Aria collection, new variant.

This signal looks consistent with the European Luxury sector in major bullish trend. The stock participation within the European luxury sector to bullish tactical signals is at 60% and 80% in strategic signals.