Broker tips: Burberry, Johnson Service
By Iain Gilbert
Date: Wednesday 09 Sep 2026
(Sharecast News) - HSBC downgraded Burberry on Wednesday to 'hold' from 'buy' and slashed its price target on the stock to 1,200p from 1,350p as it took a look at global luxury goods.
The bank said Burberry's turnaround has progressed well, but noted that there was not much scope for upwards sales and earnings revisions from here. It pointed out that the shares have already risen around 51% since November 2024 - versus the FTSE 100 index up 35% - when chief executive Josh Schulman did his first strategic presentation.
It argued that going forward, the aspirational consumer will continue to struggle in luxury's key China market and potentially in the US, due to the K-shaped economy.
"This softer consumer spending should impact Burberry, given the aspirational gearing of its price points, and given the global retail comparable basis gets progressively tougher in the next three quarters," HSBC said. "We believe that September accounts for a good portion of the coming quarter's sales too. The brand is also less seasonal than Moncler (which we keep on a Buy); combined with the challenging macro environment, this offers investors limited visibility into H2."
As far as China was concerned, HSBC said that despite Q127's particularly solid performance in the region, Burberry needs to accelerate significantly on a two-year stack to meet consensus estimates. It noted that China retail comps get particularly tough in the rest of FY 2027e, at +3%/+6%/+10%, and consensus is assuming the two-year stack accelerates from 3.6% in Q1, to 11.4%/12.7%/15.7% in Q2/Q3/Q4 2027e.
"We note that Burberry has been using its monthly product drop strategy (B Series) - limited-edition 24-hour releases via its WeChat mini-program - to help the brand in the region, but we still view consensus China expectations as too high, instead expecting a two-year stack of 8.2%/9.2%/13.3% in the region in Q2/Q3/Q4 2027e," HBSC said.
The bank was a little more positive on the US, where it said momentum should remain solid even though it should eventually normalise, especially on a tougher basis of comparison.
Analysts at Berenberg nudged their price target on Johnson Service Group down to 200p from 205p after trimming earnings forecasts on the back of a softer outlook for its hotel, restaurant and catering (HORECA) division, though they also noted that the recent share‑price reaction looked overdone.
Berenberg said Johnson Service had delivered resilient first‑half results despite a tough backdrop for UK and Irish hospitality, with group revenue broadly flat at £258m, and margin gains across both HORECA and workwear helping drive 4% underlying earnings growth and 9% earning per share growth, the latter of which was supported by ongoing buybacks.
The German bank, which has a 'buy' rating on the stock, said workwear continued to perform well, with organic revenue up 2.6% to £74m and customer retention steady at 94%. HORECA revenue dipped 0.8%, reflecting weaker hospitality spending, though both divisions posted margin improvements of 30 to 60 basis points.
Berenberg said HORECA's seasonal uplift over the summer had been "more modest than anticipated", and that it now expects softer trading to persist through the rest of FY26. Even so, it also said productivity gains and flexible cost management should help protect profitability, while workwear was expected to remain solid. JSG remains on track to deliver its 14% EBIT margin target for the year.
As a result of the weaker H2 outlook, the broker trimmed its HORECA forecasts and reduced group EPS estimates by 1% to 2% across its forecast period, but said the 7% share‑price drop on results day looked excessive given the modest changes, noting JSG still trades on "attractive" multiples, with 14% EPS growth expected in FY26.
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