LONDON, Nov 1 (Reuters) - Luxury fashion group Burberry's (BRBY.L) shares have surged more than 70 percent this year, fuelled by demand for luxury goods from newly-rich emerging markets and by takeover speculation.

Burberry A/W 2010 campaign - Winter Storms

The 154-year-old British maker of trenchcoats and leather handbags, which reported a 21 percent increase in first-half revenue in October, saw shares hit a lifetime high in September following talk of bid interest from a U.S. private equity firm.

Thrust back again into the merger and acqusition spotlight after last month's news of rival LVMH's (LVMH.PA) stakebuilding in Hermes (HRMS.PA), Burberry's growth story has divided analysts on whether there are more gains to reap.


SCOPE FOR FURTHER GROWTH

The company's strong sales performance and a recent bout of profit-taking on the shares presents investors with a "buying opportunity", said Investec analyst Katharine Wynne.

Wynne, who raised the stock's target price to 1,100 pence from 950 pence following first-half results, said Investec was optimistic on Burberry's emerging market growth and saw opportunities for raising selling prices further.

"As an international growth story it deserves to be trading on a premium rating," said Wynne. "Its exposure to emerging markets, especially to China, is very exciting and there are lots of levers of growth within existing operations," she said.

"They are broadening out their product, their customer groups are currently under-potentialised and are also broadening out in geographies."

"Also, we think the overall luxury goods market will grow especially in new territories over the next five years and Burberry is in a good position to take advantage of that."

Burberry said in July it planned to acquire 50 stores in China from a franchise partner, a deal expected to add up to 20 million pounds ($32 million) to its 2011-2012 operating profit.

It also credited first-half revenue growth to strong demand in Britain, China, France, Hong Kong, and Italy, with many of these markets benefiting from an increase in tourist travel, particularly by the Chinese.