Barclays has downgraded Hennes & Mauritz AB from Equalweight to Underweight and assigned a price objective of SEK162.00, which the bank says implies roughly 14% downside from current levels.
The investment bank's decision reflects what it describes as a lack of convincing evidence that the H&M brand is regaining consumer momentum. Barclays' note highlights that sales growth at H&M remained muted through 2024 and 2025 when compared with peers, and that sales turned negative in early 2026.
At the same time, Barclays acknowledged operational improvements at the Swedish retailer. The bank pointed to a leaner cost base, a recovery in gross margins and a tighter inventory position as positive developments. However, it said those improvements do not, in its view, demonstrate that the brand has started to win back shoppers in a way that would support sustained sales expansion.
Valuation was another central concern for Barclays. The bank highlighted H&M's calendar year 2027 price-to-earnings multiple of 21x and compared it with several peers: NEXT at 15.5x, Marks & Spencer at 11.5x and Zalando at 11x, while Inditex sits higher at 24x. Barclays suggested the recent upward re-rating of H&M's shares has been driven chiefly by an improved margin outlook, but warned that the market is pricing-in sales-led earnings upgrades that the bank judges unlikely to occur.
Other corporate developments were noted alongside Barclays' action. H&M reported a stronger-than-expected result in its fourth quarter of 2025, with earnings before interest and taxes exceeding forecasts by 13%. Despite that beat, JPMorgan has kept an Underweight recommendation on the stock, citing persistent cost pressures.
Separately, shareholders at H&M's 2025 annual general meeting approved a SEK1 billion share buyback program. The company said the repurchase will target its class B shares as a means of returning capital to investors and adjusting the capital structure. These measures illustrate management's efforts to manage financial policy while the company navigates the current market challenges.
Bottom line - Barclays has downgraded H&M to Underweight with a SEK162 price target, pointing to subdued sales trends and a valuation that, in its view, relies on sales improvements that may not materialize despite operational gains and recent shareholder returns.