An analyst advised buying shares of an Italian luxury company. What is its Xi?

Investment bank TD Cowen has upgraded its recommendation on shares of Italian fashion house Ermenegildo Zegna, citing strong demand from affluent customers and improving business fundamentals, CNBC writes.

TD Cowen on Ma 20 raised its recommendation on Zegna from "hold" to "buy" and raised its target price to $15. The new target implies the potential growth of the company's quotations by about 12% by the close of trading on Ma 20.

"We see improving fundamentals due to Zegna's sustainable vertically integrated business and a clearer path to stabilize the Tom Ford and Thom Browne brands," analyst Oliver Chen wrote in a note to clients cited by CNBC. Zegna Group owns a controlling stake in Thom Browne, and it also holds a long-term license to operate the Tom Ford business through an agreement with Estée Lauder. At the same time, Zegna's flagship brand remains resilient even during periods of decline in luxury thanks to product personalization, strong positions in the suits segment and long-term relationships with customers, the analyst adds.

TD Cowen believes that Zegna is also benefiting from the increasing stratification of consumer spending in the US. Analysts called the company the beneficiary of a "K-shaped" consumption pattern, in which affluent consumers continue to spend aggressively while the less affluent reduce spending.

The global personal luxury goods market will grow only 2.5% in 2026 - less than previous expectations, CNBC cites a forecast by Morgan Stanley Research.

Zegna's shares, which trade on the New York Stock Exchange, rose nearly 7% at the end of trading on Ma. 20. Over the past 12 months, the company's market value has risen 55% despite pressure on the luxury industry from geopolitical risks and slowing consumer spending, CNBC noted. In reports for the first quarter of 2026, LVMH,Hermès and Gucci brand owner Kering reported lower sales and revenue due to the impact of the war with Iran and the blockage of the Strait of Hormuz. Over the past year, LVMH shares fell 6%, Hermès shares fell 36%, while Kering shares jumped 35.9%.

Analysts covering Zegna are optimistic: nine out of 12 recommend the securities to buy, the rest - advise neither to reduce nor to increase the position. At the same time, the average target price of the shares is $11.3, which is lower than the current quotations.

This article was AI-translated and verified by a human editor