​​​Burberry share price languishes ahead of full-year earnings

​​​Burberry share price hovers near recent lows

​Burberry offers little by way of good news right now after January's second profit warning in three months. The iconic British brand's one-year share price chart goes straight from the top left to bottom right.

​Burberry lags FTSE 100 rebound

​The past year has seen Burberry fall further and further behind the FTSE 100, and since the beginning of the year this gap has become a yawning gulf.

​While other parts of the index continue to look undervalued, the luxury sector has enjoyed higher valuations, but now the higher growth rates of the sector have faded away. This has meant that investors are looking elsewhere for strong returns.

​While China’s economy and stock market have both rebounded, that optimism has not spread to Burberry.

​Priced for continued misery?

​While profit warnings often arrive in triplicates, Burberry may have already seen its valuation pummelled to reflect the current gloom. Analysts expect pre-tax profits to plunge by a third in fiscal 2024 and only modestly recover over the following two years. Some are even forecasting a dividend cut.

​However, Burberry shares currently trade at the same depressed levels as 2011 when profits and dividends were substantially lower than current expectations for 2024. The stock changes hands at 16 times forecast earnings while offering a 4% dividend yield.

​Cheap for a reason

​Burberry might be cheaper than many of its global rivals, but their customer bases are wealthier than Burberry’s. This gives them a more solid foundation for the ups and downs of the global economy.

​Nonetheless, with so much bad news now arguably priced in, it wouldn’t take too much of a recovery in performance to lift Burberry from the doldrums.

​Analyst ratings for Burberry

​Refinitiv data shows a consensus analyst rating of ‘hold’ for Burberry with 17 hold and 3 sell – and a mean of estimates suggesting a long-term price target of 1,298.33 pence for the share, roughly 10% higher than the current price (as of 10 May 2024).

​Technical outlook on the Burberry share price

​Burberry’s share price has been rapidly falling from its April 2023 peak at 2,656 pence, by around 56%, with further possible downside taking it towards the psychological 1,000p region.

​Burberry Weekly Candlestick Chart

​The Burberry share price, which is already trading at an 15% year-to-date discount, is slipping towards its April low at 1,103.5p. Below it lies the share’s pandemic low at 1,017p.

​Burberry Daily Candlestick Chart

​Minor resistance can be seen at last week’s 1,202.5p high.

​For a medium-term recovery to be on the cards, the late-January and February highs at 1,351p would need to be exceeded on a daily chart closing basis, something which looks technically unlikely for the time being as a clear downtrend has the upper hand as can be seen by the (orange) downward sloping 55-day simple moving average (SMA) at 1,207.1p.