Research Market strategy
By Swissquote Analysts
Published on 08.06.2023
Morning news

Inditex Stock Up On Q1 Profit Growth

Topic of the day

Shares of Inditex SA were gaining 5.7 percent in Spain after the clothing firm that owns Zara reported Wednesday significant growth in its first-quarter profit on higher revenues as well as the absence of a prior year provision. Regarding the second quarter to date, the company revealed its store and online sales in constant currency between May 1 and June 4 increased 16 percent versus the same period in 2022. Inditex indicated seeing strong growth opportunities. Spring/Summer collections continue to be very well received by customers. For the fiscal year 2023, the company expects a stable gross margin, plus or minus 50 basis points. At current exchange rates, Inditex forecasts a negative 2.5 percent currency impact on sales. As announced earlier, Inditex's Board of Directors will propose to the Annual General Meeting a dividend for fiscal 2022 of 1.20 euros. The dividend is composed of two equal payments of 0.60 euro per share. The first interim payment was made on May 2 and the final dividend payment will be made on November 2. For the first quarter, net income increased 54 percent to 1.2 billion euros from last year's 760 million euros. The prior year results reflected a provision for expected expenses in the Russian Federation and Ukraine of 216 million euros. Profit before tax grew 52 percent to 1.5 billion euros, and EBIT increased 43 percent year-over-year to 1.5 billion euros. EBITDA increased 14 percent to 2.2 billion euros. The gross margin reached 60.5 percent, 34 basis points higher than last year. Operating expenses increased 13 percent, below sales growth. Sales grew 13 percent from the prior year to 7.6 billion euros, with good development both in stores and online. Sales were positive in all geographical areas and in all concepts. Sales in constant currency grew 15 percent. In Spain, Inditex shares were trading at 33.63 euros, up 5.7 percent.

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Swiss stocks

The stock market in Switzerland ended Wednesday with marked losses. The SMI declined by 1 per cent to 11,348 points. Among the 20 SMI stocks, there were 16 price losers and 4 price winners. 36.4 (previously: 37.36) million shares were traded. Banking stocks outperformed the entire market. Credit Suisse gained 0.1 per cent and UBS was hardly changed. Cyclicals also held up well. ABB added 0.3 per cent, Holcim climbed 0.3 per cent and Geberit fell 0.6 per cent. Losses among the index heavyweights dragged the SMI down. Nestle, Novartis and Roche dropped between 1.1 and 1.5 per cent.

International markets


The European stock markets closed slightly lower on Wednesday, as investors continued to question the global economic outlook and the interest rate trajectories of the major central banks. The Stoxx Europe 600 index fell by 0.2% to 460.8 points. In Paris, the CAC 40 and SBF 120 were each down 0.1%. The DAX 40 in Frankfurt lost 0.2%, while the FTSE 100 shed 0.1%. Digital services company Atos (-4.6%) detailed the refocusing plan and raised the medium-term ambitions of its Tech Foundations division, which brings together its historic outsourcing services activities, at a day dedicated to financial analysts. Semiconductor manufacturers STMicroelectronics (+3.2%) and Sanan Optoelectronics announced that they had signed an agreement to set up a joint venture in China to produce silicon carbide (SiC) components with a diameter of 200 millimetres. British telecoms group Vodafone (up 2% in London) and Hong Kong-listed CK Hutchison are close to agreeing a merger of their UK businesses, according to Reuters. British spirits maker Diageo (-0.5% in London) confirmed that its former chief executive, Ivan Menezes, had died after a brief illness. Diageo had reported on Monday that Ivan Menezes was in hospital and that Debra Crew had been appointed interim CEO with immediate effect.

United States

Stocks fell Wednesday after a surprise rate hike from the Bank of Canada took the air out of a Tuesday rally. Major stock indexes came under pressure as the trading day wore on, a day after the S&P 500 and Nasdaq Composite set fresh highs for the year. The benchmark S&P 500 shed 0.4%. The tech-heavy Nasdaq lost 1.3%, while the Dow Jones Industrial Average gained 0.3%. The S&P 500 briefly touched bull-market territory Wednesday morning, but it didn’t last. Stocks’ declines were sparked by the Bank of Canada’s unexpected decision to raise interest rates to a 22-year high after a four-month pause in tightening. The central bank cited a strong labor market and consumer spending as risks to inflation’s path to its 2% target. Under the stock-market hood, Marathon Oil’s 4.9% rise propelled the S&P 500’s energy sector. Tesla stock added 1.5% in its ride to a ninth-consecutive daily gain, its longest winning streak since January 2021, according to Dow Jones Market Data. Shares of Elon Musk’s electric-vehicle maker notched their highest close since late last year. Small-cap stocks surged Wednesday despite broader market weakness. The Russell 2000 advanced 1.8%, building upon a strong start to June after struggling for much of the year. Supporting U.S. stocks was a sign that the economy remains in good health: Americans upped their imports in April.


Stocks in Asia mostly fell on Thursday. In Shanghai, the Composite Index drops by 0.1 per cent, in Hong Kong the Hang Seng Index loses 0.4 per cent. The Nikkei 225 index falls by 1.0 per cent in Tokyo, also weighed down by a slight rise in the yen. In Seoul, South Korea (-0.6 per cent), investors shed technology stocks. Shares in Samsung Electronics decrease by 1 per cent. LG Energy Solution declines by 2.5 per cent.


U.S. Treasury yields rose on Wednesday after the Bank of Canada unexpectedly hiked its key interest rate by a quarter-percentage-point to 4.75% and ended its four-month pause, fuelling bets that the Federal Reserve may still need to raise interest rates after its policy meeting next week. The 10-year Treasury note yield rose by 12 basis points to 3.796%. The 2-year Treasury note yield added 7 basis points to 4.567%.


Target price Partners Group: Goldman Sachs lowers to CHF 1020 (1060) - Buy

Barry Callebaut target price: UBS downgrades to 2400 (2500) Fr. - Buy

Target price Givaudan: Goldman Sachs cuts to CHF 2800 (2850) - Sell

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