eyeQ: is all the good news in Burberry’s share price?
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Here’s its view on the luxury goods firm.
13th May 2025 11:21
Huw Roberts from eyeQ
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Burberry
Macro Relevance: 56%
Model Value: 613.20p
Fair Value Gap: +24.96% premium to model value
Data correct as at 13 May 2025. Please click glossary for explanation of terms. Long-term strategic model.
Burberry Group (LSE:BRBY) goes into tomorrow's earnings release having rallied around 30% in the last month. Luxury goods were one of the big losers from a potential global trade war, so the news of a US-China tariff rapprochement has helped fuel a strong rally.
What's the macro point of view?
Firstly, that company fundamentals have been more important recently. Burberry had a poor run over 2023/24 and new management is now trying to revamp the brand. News on that turnaround plan will be critical.
That said, macro factors explain just over half of price action right now (eyeQ's macro relevance score is 56%) . That's below our threshold for a macro regime but does suggest macro can't be completely ignored.
Secondly, eyeQ model value has yet to really enjoy any bounce. It has stopped falling but judging by our model value, macro conditions have yet to materially improve.
That means this latest rally has taken the stock into rich territory on eyeQ. BRBY sits almost 25% above our 613.20p price "target".
Low macro relevance precludes an official bearish signal, but it does suggest a fair degree of good news is already in the price. Again, company news will dictate the market's reaction to tomorrow's earnings, but - from the macro perspective - this isn't a stock with a particularly attractive risk-reward right now.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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Disclosure
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