The bank downgraded the stock to ‘hold’ from ‘buy’ and slashed the target price to 7,050p from 7,300p after reducing future estimates.
Although the FTSE 100-listed clothing retailer upped its guidance to £727mln from the previous £725mln based on surprisingly good fourth-quarter performance, the revision prompted HSBC to cut the top end of its profit before tax expectations range.
Analysts previously estimated a maximum pre-tax profit of £741mln in 2020 and £771mln in 2021, but had to trim it by 2% and 5% to £727mln and £771mln respectively.
The 5% cut extended to 2022, when profit before tax is now expected to be £788mln.
Earnings per share were trimmed by 1.4%, 2.3% and 2.5% for 2020, 2021 and 2022 to 462p, 484p and 494p, respectively.
“Upside risks include better UK consumer confidence on reduced economic uncertainty, and lower input costs from 2022 estimates in the event of a stronger British pound,” the note read.