Kering (NR, A Neg) {KER FP Equity}

Barclays analyst views below. Kering is starting to screen cheap to us here hence following up with analyst views.

• Originally had 1Q organic sales for Group at -3%yoy (mgmt -10%) & Gucci at -7% (mgmt -20%). It has taken mgmt guidance for 1Q in full pushing FY24 adj. EPS down by -5%. It hasn't translated weaker 1H into 2H forecasts - sees growth in Gucci 2H sales now (though from a lower base) netting to a similar 2H EBIT to previous estimates.
• It does see weaker margins now; originally had EBIT margins at 30% from 1H at 28.8% & 2H at 29.6% - its now revised that to 28.8% and 29% respectively.
• We don't see any expectations from analyst on dividends being pared back substantially (Kering targets sizeable pay-out ratio at 50% of NI/no buybacks currently though) - S&P has assumed 50% payout & no buybacks to continue.
• Net impact of above is EBIT revised down ~€200m to €4.1b in FY24 - that revision (of -€200m) is carried over to FY25 & FY26 estimates (i.e. hasn't extended negative 1H growth out). It leaves growth flat, +6.4%, +6.5% over FY24-26 - S&P expects organic growth to recover to 4-5^ over FY24-25.
• FCF at €3.7b, €3.8b & €4.3b over FY24 -26 compares to S&P FOCF estimates of €3-3.5b in FY24 & €3.5-4b in FY25. Capex assumptions are in-line with S&P's at €1.2-1.3b.

Barclays sales & NI fcsts are below bbg consensus, FCF is higher than consensus (c €3.3/3.7b in FY24/25) that looks to be driven by higher Capex numbers in market consensus (€1.4b/1.35b in FY24/25). Nothing of alarm for us from the analysts with positive for credit on no translation of the 1H miss to a lack of a recovery in the 2H and/or following years - if S&P sees the same it may leave Kering on A Neg till FY24 results roll over.