Today’s ‘hottest’ stock on the FTSE 100 index has plenty of high-profile backers

By mid-morning today (15 October), Burberry Group (LSE:BRBY) was the best performer on the FTSE 100 index. Its share price was up 7% after LVMH, owner of many luxury brands including Louis Vuitton and Dior, released its third-quarter (Q3) results. The Paris-based group beat analysts’ expectations with a 1% increase in sales and its shares soared 14%. Investors on both sides of the English Channel clearly feel this could be the start of a recovery for the troubled sector.

The jump in Burberry’s share price also comes after a broker upgrade on 9 October. Deutsche Bank said it was taking a “leap of faith” after revisiting the investment case for European luxury stocks. Although the bank cautioned that “we are still in the early days of the sector recovery”, it thinks China could help “see a further leg up” in 2026. It lifted its rating on the stock from Hold to Buy and set a new price target of 1,500p.

In September, Citi also upgraded the stock to a Buy. Following a discussion with the group’s management, it said it had confidence in the group’s wholesale order book for the second half of its 2026 financial year.

The average 12-month price target of analysts is 1,400p.

Famous faces

And away from the financial world, Burberry has plenty of supporters too.

Melania Trump was wearing one of the brand’s iconic trench coats during her recent visit to the UK. In September, Lila Moss, Naomi Campbell and Alexa Chung were all on the front row when Burberry closed London Fashion Week with its spring/summer 2026 collection.

There were plenty of singers and musicians in the room as well. And from what I can tell, the collection appears to have been well received by journalists.

Burberry doesn’t feel like a brand in decline to me.

A mixed picture

But the group’s share price is now around half what it was in April 2023. A slowdown in the luxury fashion market saw a drop in Burberry’s revenue and earnings. And tariffs haven’t helped either.

Sales for the 52 weeks ended 29 March were 17% lower than for the same period a year earlier. The group reported a loss per share of 20.9p and suspended its dividend. Like-for-like (LFL) sales fell in all regions.

During the 13 weeks to 28 June, retail revenue was down 6%. But there was LFL growth in the Americas (4%) and EMEAI (1%).

And it must be said that the LVMH group comprises more than just clothing. Indeed, its fashion and leather goods division was the only one to see a drop in revenue during Q3. But investors are looking for signs that the market may have turned the corner. There’s clearly enough in the LVMH earnings report to suggest that a recover might be under way.

We’ll know on 13 November — when Burberry releases its half-year results — whether its strategy of returning to the group’s heritage is working.

Personally, I remain optimistic. However, I’m expecting a few bumps along the way. President Trump’s on-off approach to tariffs on China’s exports has yet to run its course. But the group’s been around since 1856 and has overcome many more serious challenges before. On balance, I think Burberry’s a stock worthy of further consideration.

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James Beard has positions in Burberry Group Plc. The Motley Fool UK has recommended Burberry Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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