Burberry: Best Dressed Recovery Story; Upgrade to OW

Research evidence excerpt

Burberry: Best Dressed Recovery Story; Upgrade to OW

Idea

May 18, 2026 03:57 AM GMT

Morgan Stanley & Co. International plc+MBurberry | Europe Grace Smalley, CFA

Equity Analyst

Best Dressed Recovery Story; Grace.Smalley@morganstanley.comEdouard Aubin +44 20 7425-9629

Edouard.Aubin@morganstanley.com +44 20 7425-3160

Upgrade to OW Natasha Bonnet

What’s Changed Natasha.Bonnet@morganstanley.com +44 20 7677-5723

Cedric Norest

Burberry (BRBY.L) From To Research Associate

Rating Equal-weight Overweight Cedric.Norest@morganstanley.com +44 20 7425-1462

Top Pick Added - BRBY.L

Burberry (BRBY.L, BRBY LN)

We see the recent pull-back in Burberry shares as an Top Pick

Brands | United Kingdom

opportunistic entry-point and upgrade to Overweight and make

it our Top Pick. StockIndustryRatingView OverweightIn-Line

Price target 1,350p

Burberry last week reported FY26 results (see here) that disappointed the market, Shr price, close (May 15, 2026) 1,062p

52-Week Range 1,377-939p

with the shares -9% since (vs. FTSE 100 -1%). We believe the primary reason for Mkt cap, curr (mn) £3,825

weakness in the shares has been driven by decreased confidence in Burberry's Net debt (03/27e) (mn)* £(366)

EV, curr (mn)* £3,728

medium-term story, in particular the ability to rebuild towards high-teens EBIT

* = GAAP or approximated based on GAAP

margin, weighing on valuation. However, we believe that Burberry continues to have

Fiscal Year Ending 03/26 03/27e 03/28e 03/29e

multiple levers at its disposal to drive stronger top-line growth and improved sales

Sales / Revenue 2,420 2,544 2,696 2,860

productivity, which combined with ongoing solid cost control, ought to support the (£mn)**

company's margin recovery, in our view. We hence see this as an opportunistic entry- EBIT (£mn)** 160 251 355 445