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Bulgari Shares Downgraded

Citigroup became the latest bank to downgrade Bulgari SpA's stock to "sell" over concerns the jeweler faced limited growth prospects in the immediate future.

MILAN – Citigroup became the latest bank to downgrade Bulgari SpA’s stock to “sell” over concerns the jeweler faced limited growth prospects in the immediate future.

This story first appeared in the September 10, 2008 issue of WWD.  Subscribe Today.

Citigroup analysts Thomas Chauvet and Richard Edwards cut their target price for Bulgari to 6.40 euros, or $9.14 at current exchange, from 7.80 euros, or $11.14, citing unfavorable geographic exposure and underperforming watch and accessories sales.

“One-third of Bulgari’s revenues are generated in Italy and Japan, versus about 15 to 18 percent for the broader luxury sector,” the analysts wrote in a research note. “These markets have limited growth prospects in 2008-’09 and significant downside risks to GDP and private consumption.

“Watches and accessories [which account for around 35 percent of group revenues and earnings] once again underperformed group and luxury industry trends. We believe the repositioning exercised in these product categories will take some time to deliver tangible results,” they added. Last month, a number of other banks and securities firms cut ratings or share price estimates on Bulgari’s stock after the jeweler narrowed its full-year guidance following an 8.8 percent drop in second-quarter profits.

 

Bulgari shares fell 1.7 percent to 7.21 euros, or $10.29, at the close of trading in Milan on Tuesday.