MILAN — Even though Prada has pulled its initial public offering for the third time, analysts said Thursday that it shouldn’t have a big effect on the success of an eventual IPO, if and when the company finally takes the plunge.
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Most analysts said they weren’t concerned that continual postponements would wear on the firm’s credibility with investors. They reiterated their bigger beef: that even current market valuations prove too expensive for a company with money-losing divisions like Helmut Lang and Jil Sander amid a lackluster market for high-end goods. Speculative market valuations of Prada vary enormously from as low as $1.96 billion to as high as $3.92 billion. Dollar figures were converted from the euro at current exchange rates.
“I don’t really think it will be a problem for credibility. I don’t think [Prada chief executive officer Patrizio] Bertelli’s credibility with investors was that high already,” said one Paris-based analyst.
Andrew Gowen, an analyst with Lehman Bros. in London, said he saw no substantial aftershocks after the cancellation. “The cancellation of the IPO will not have any material effect on Prada’s plans to go public,” he said.
Prada is mum on if and when it could finally try its hand at an IPO, although some observers said the company could pursue it in the fall if market conditions improve and there are signs that a demand for luxury goods is picking up. If those conditions are met, some analysts said Prada could see its value rise to the $3.92 billion to $4.90 billion range.
“Calling off the IPO for a third time does discourage the market a little bit,” said one Milan-based analyst. “But Prada is among the big brands and you can’t ignore it. If they decide to go public they would be among the biggest European luxury players.”
Expressing a minority view, one analyst vented expression on what she perceived as Bertelli’s noncommittal approach. Poor market conditions or not, Prada needs to pay down its debt pile of some $784.6 million, she said.
“I understand that market conditions are bad, but they are bad for everyone and other IPOs are going ahead,” she said, alluding to the upcoming Burberry IPO in London next month.”