Overview
Shares of LVMH, the luxury goods conglomerate owned by Bernard Arnault, experienced a significant rebound on Wednesday, attempting to recover from a notable decline earlier in the year. This uptick in stock price is attributed to an upgrade from Goldman Sachs, which has included LVMH in its European Conviction Buy list.
Goldman Sachs Upgrade
Goldman Sachs analysts have encouraged investors to overlook the softness observed in the second quarter, labeling LVMH as a "clear winner in the next luxury upcycle." This optimistic outlook has contributed to the stock's recovery, with a target price set to reclaim the key support level of €536, which was pivotal for the company's gains in 2023 and 2024.
Bernard Arnault's Position
Bernard Arnault, once competing with Elon Musk for the title of the world's richest individual, has seen his ranking drop to seventh due to the decline in LVMH's stock value. The company has faced challenges stemming from a sluggish economy in China and cautious consumer behavior, compounded by uncertainties in trade relations.
Market Challenges
Despite its status as the world's largest luxury group, LVMH has been navigating a tough market environment. The conglomerate, which boasts a diverse portfolio of 75 high-end brands including Louis Vuitton, Dior, and Fendi, has been impacted by economic pressures, particularly in China.
Rival Analyst Perspectives
In contrast to Goldman Sachs' bullish stance, Morgan Stanley recently downgraded its price target for LVMH from €560 to €510, citing potential earnings pressure due to operating deleverage and unfavorable foreign exchange movements. They also revised their organic sales growth forecast for the first half of 2025 to a negative 7.5% year-on-year, primarily due to declining demand from key consumer demographics, particularly Chinese tourists in Japan.
Positive Retail Data
On a more positive note, recent quarterly retail data has shown resilient demand for LVMH products across Asia and North America, which may lead to short-covering in the stock as investors react to these encouraging signs.