Burberry: FV increased to GBP17
BUY, Fair Value 1700p vs. 1600p (+10%)
Following FY13 results, our earnings estimates are slightly cut (-3% on average) as we take a more cautious view on margin expansion in the near-term. However, we increase our DCF-derived Fair Value to GBP17 from GBP16 mainly as a result of a new risk-free rate of 3% vs. 3.3% previously. We reiterate Burberry as one of our two top picks (with adidas) given its top-line momentum and medium/long-term margin expansion potential, as well as attractive valuation.
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