Investing.com - Goldman Sachs downgraded Ermenegildo Zegna Group (NYSE:ZGN) to Neutral from Buy and set a price target of $14.00, up from $13.30.
The luxury fashion company’s shares have risen 39% year-to-date and approximately 60% over the past 12 months. The stock has outperformed luxury peers and the STOXX600 by 57 percentage points and 44 percentage points respectively during the period.The strong rally has pushed the stock’s valuation to elevated levels, with shares trading at a P/E ratio of 33.7. According to InvestingPro analysis, the stock currently appears slightly overvalued relative to its Fair Value. The platform identifies this as one of 10+ key insights available to subscribers, including detailed Pro Research Reports covering ZGN and 1,400+ other US equities.
Goldman Sachs attributed the outperformance to the Zegna brand’s growth driven by exposure to high-end consumers, product initiatives, and clienteling capabilities. The firm also cited reduced China exposure with increased U.S. market share and a shift toward direct-to-consumer sales, which now represent 82% of group revenues. The company’s impressive gross profit margin of 67.5% underscores the strength of its luxury positioning.
The investment bank said its fundamental view on the company remains unchanged and it continues to see solid execution and supportive structural drivers. Goldman Sachs said incremental upside is now limited as the improved perception of the Zegna brand and earnings profile has driven a revaluation.
The firm identified the main risks to its view as the quality and pace of strategy execution and macroeconomic factors including consumer confidence and spending levels.
In other recent news, Ermenegildo Zegna Group reported its financial results for the first quarter of 2026, exceeding revenue expectations. The company achieved EUR 470 million in revenue, surpassing the forecasted EUR 464.7 million. This positive outcome was largely attributed to strong direct-to-consumer sales and significant growth in the Americas region. In another development, TD Cowen upgraded Ermenegildo Zegna’s stock rating from Hold to Buy, raising the price target from $13.00 to $15.00. The upgrade was based on the durability of the core Zegna brand and potential improvements at Tom Ford and Thom Browne. TD Cowen noted possible margin improvements as the direct-to-consumer mix increases and expense leverage improves across the brands. These recent developments highlight the company’s solid performance and strategic growth potential.
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