UBS has issued a research report reiterating a "Neutral" rating on PRADA (01913), while cutting its target price from HK$39.5 to HK$36.3 and reducing its earnings per share forecasts for 2026 through 2028 by 5%, 8%, and 7% respectively.

PRADA is scheduled to release its third-quarter results on the 22nd of this month. UBS currently forecasts quarterly revenue of 1.488 billion euros, representing organic growth of approximately 1%.

The bank noted that PRADA has effectively managed Miu Miu throughout the year, with the brand's growth trending toward normalization, while the Prada brand has also shown resilience, supporting expectations of a soft landing. Third-quarter direct-to-consumer (DTC) revenue is expected to reach 1.282 billion euros.

However, ongoing conflicts in the Middle East, combined with softening consumer demand in the United States and China, are expected by UBS to weigh on the overall luxury industry's performance in the third quarter.

UBS pointed out that Google search trends for the PRADA group's brands have been slowing, making it difficult for investors to determine whether the deceleration stems from cyclical industry weakness or intensifying market competition, raising questions about growth prospects for the fourth quarter and beyond.

The bank continues to view PRADA as a potential long-term Italian luxury consolidator and prefers to treat this year as a transitional period.