Hermès International entered 2026 with softer results than many investors anticipated, but Jefferies maintains the view that the luxury house is well placed for sustained growth over the long term. The broker reiterated its Buy recommendation on the stock while reducing its price target to 800 from 800 - this change reflects a reassessment of near-term prospects amid a mixed operating backdrop.
Jefferies pointed to a first-quarter organic sales increase of 5.6% that fell short of some expectations. That growth rate masked uneven performance across channels and regions: wholesale sales were weak, spending by Middle East travelers in Paris softened, and demand from China remained lackluster. By contrast, the Americas delivered robust growth of 17.2%, and Japan and Europe showed generally healthy trends. Asia excluding Japan expanded by just 2.2%, underscoring persistent challenges tied to Chinese consumption.
For the second quarter, Jefferies is forecasting organic revenue growth of 6.9%, marginally under the market consensus of 7.3%. The broker's scenario assumes an 11% increase in leather goods and 3.5% growth in non-leather categories. On profitability, Jefferies projects first-half EBIT of approximately 30.29 billion, which it describes as broadly in line with consensus estimates.
Despite the recent softness, Jefferies highlighted several indicators it views as constructive ahead of Herm8s' July 29 earnings report. The firm noted signs that quota-based spending in China for coveted handbags is beginning to recover, and that global premiums at Birkin auctions have improved. On digital and demand signals, U.S. Google search interest for the brand surged by roughly 50% year-over-year in the second quarter, while global web traffic is running about 16% higher.
The brokerage argued the market has materially repriced Herm e8s shares after the sell-off: the stock now trades at roughly 33 times expected 2027 earnings, a marked discount to the historical premium investors have assigned. Jefferies trimmed its sales and earnings forecasts for the 2026-2028 period but reiterated its view that Herm e8s remains one of the best-positioned luxury names to capture rising affluence among wealthy consumers in Asia and the United States.
Jefferies expects the upcoming second-quarter disclosure to be an inflection point for investor sentiment if early signs of demand improvement are confirmed. For now, the broker's adjustments to forecasts and valuation reflect a cautious stance on near-term momentum while preserving confidence in the company's long-term structural strengths.
Summary
Jefferies retains a Buy rating on Herm e8s but lowers its price target to 800 amid mixed regional trends and a softer-than-expected first quarter. The broker forecasts modestly below-consensus second-quarter organic growth and keeps first-half EBIT near consensus. Early signs of demand recovery in China and improved auction premiums are cited as encouraging signals ahead of the July 29 results.