Shares in De’ Longhi, the Italian manufacturer of espresso machines and home appliances, jumped on Thursday after Goldman Sachs initiated coverage of the stock with a Buy rating. The shares climbed more than 4% in Milan trading, outperforming a broadly flat FTSE MIB index and giving a lift to the European consumer goods sector.
Goldman Sachs analysts argued that De’ Longhi’s strong brand portfolio, including the De’ Longhi, Kenwood, and Braun household names, positions it well to capture growing demand for premium home appliances. They also highlighted the company’s exposure to the coffee machine market, which has seen resilient consumer spending despite broader economic headwinds.
The positive note comes as UK investors and pension holders with exposure to European equities have been watching the consumer discretionary sector for signs of recovery. De’ Longhi’s shares have been volatile this year, reflecting concerns about inflation and weaker consumer confidence in key markets. However, the Goldman Sachs initiation has injected fresh optimism.
“De’ Longhi offers a compelling mix of brand strength and margin expansion potential,” the note reportedly stated. “We see scope for earnings upgrades as the company benefits from new product cycles and geographic expansion.” The brokerage set a price target implying further upside from current levels.
For UK investors, the move underscores the importance of stock-specific catalysts in a market still grappling with interest rate uncertainty. While the FTSE 100 edged lower on Thursday, the broader European consumer goods index gained ground, partly driven by De’ Longhi’s rally. Any sustained strength in the sector could benefit UK-based pension funds with allocations to European equities.