Hermès International SCA received its first sell ratings in over a year from Goldman Sachs and UBS, signaling a shift in analyst sentiment on the luxury brand.
UBS analyst Susanna Pusch downgraded Hermès from neutral to sell, cutting its price target by 31 percent to €1,168 from €1,695. The stock closed at €1,299.50 on the last trading day, trading 11 percent above UBS's new target. Goldman Sachs analyst Elwan Lamblin initiated coverage with a sell rating and a €1,350 price target.
The downgrades rest on three structural headwinds. First, UBS flagged increased supply of Hermès products in the secondhand market and a rising proportion of non-quota bags, which normalize resale market profits and dampen demand cyclicality. Second, Goldman Sachs cited an end to consistent double-digit revenue growth, attributing the slowdown to declining non-leather goods sales. Third, UBS projects Hermès' 2027 operating margin at 38.3 percent—a 100 basis point decline—driven by slower sales eroding scale benefits, currency hedging pressures, and higher communication spending.
UBS forecasts organic sales growth of 5 percent in 2027, with leather goods growing 7 percent, signaling deceleration in both pricing and volume.
Countering the bearish view, Hermès trades at 38 times earnings, below its 10-year average of 50 times. Some market participants view current pressures—Middle East conflict, travel disruptions—as temporary and argue they do not undermine the brand's long-term secular growth or exclusive positioning.
