The Ibex titan that has a potential of 17% after being left behind

The stock that was the most heavily weighted on the Ibex at the end of 2024 has dropped to fourth place in the ranking after lagging behind in this year's stock market rally. This week marks a key moment for its share price. The company has upside potential and a dividend yield of over 4% for the coming years.

Inditex, the largest company by market capitalization (€132.5 billion), presents its half-year results tomorrow, feeling the aftereffects of its recent financial results. The analyst consensus forecasts net profit of €2.818 billion , up 1.8% year-over-year. At current prices, Inditex has a potential upside of 17%, to €50, and its dividend yield exceeds 4%.

Investors expect weak financial results affected by the currency effect . In a bullish year, in which the Ibex rose 28.8%, the owner of Zara is one of the few stocks to fall, down more than 14%.

Inditex will publish its first half-year results (February to July) tomorrow before the market opens. "We anticipate weak momentum due to significant headwinds from the exchange rate," warns Patricia Cifuentes, analyst at Bestinver Securities . Despite lowering her forecasts for the 2025-2027 period, she recommends buying shares. "With an estimated P/E of 20.8x for 2026, Inditex is trading at a significant discount to historical multiples, and its premium compared to its competitors has narrowed substantially. This is unjustified given Inditex's expected outperformance relative to the sector in the medium term," she explains. Added to this is a dividend yield of over 4% between now and 2027. She believes the stock has room to rise to €50.5-€55.5, up to 32% above yesterday's close.

"The fundamentals and business model remain very solid, but the stock is experiencing some slowdown and maturity in growth, and it is more difficult to continue expanding margins at very high levels compared to its competitors, given historical perspectives," comments Elena Fernández-Trapiella of Bankinter. "Although Inditex has an unmatched ability to quickly adapt to fashion and weather trends, uncertainty on several fronts is holding back non-essential consumption," she notes. However, she forecasts sustained sales growth of around 7% in the coming years and profits of between 8% and 9%.

Renta 4 expects Inditex's sales pace to return to more normal levels after the slowdown experienced in the first half of the first quarter. It forecasts sales will increase by 7.3% , excluding the currency effect, following weather conditions consistent with the summer months. "The appreciation of the euro, however, should remain significant, and we discount a negative impact on revenue of three percentage points," notes Renta 4 analyst Iván San Félix.

He hopes that Inditex will maintain its annual objectives.

Jefferies analysts believe the "moment of truth" is arriving for Inditex, and so they titled their report. They lowered their expectations ahead of the results. Although they believe Inditex's competitive moat continues to expand, "more convincing sales data is needed for multiples to move from their post-Covid lows."

Inditex, which closed 2024 as the most heavily weighted Ibex stock (15.66%), has dropped to fourth place and now has a 10% weighting. It has lost ground to Santander, Iberdrola, and BBVA.