On Monday, RBC Capital adjusted its price target on shares of LVMH Moet Hennessy Louis Vuitton SE (EPA:MC) (OTC:), slightly lowering it to €900 from €900. The firm maintained an Outperform rating on the stock.
The revision follows a period of relative weakness in LVMH’s share performance, with a notable decline of 18% compared to the MSCI’s 2% gain over the past three months. The analyst cited a downgrade to 21 times forward P/E as a more accurate reflection of the risk/reward adjustment for the company.
The report predicts that margin pressures in the wine and spirits and fashion and leather goods sectors will be significant factors in the first half of 2024 estimates. However, for the second half of the year, RBC Capital expresses subdued optimism, highlighting the potential for earnings acceleration, which the market would likely view positively. This forecast is largely supported by favorable comparative figures from the previous year.
RBC Capital’s stance on the luxury sector has been cautious for some time, but the firm is showing a relatively more bullish view on LVMH due to its competitive advantages. The firm also noted that its estimate for LVMH’s FY24E EBIT is 2% lower, in line with its new price target of €900.
The luxury goods company, known for its well-known brands and high-quality products, is in a difficult economic environment. With this revised outlook, RBC Capital signals its faith in LVMH’s ability to outperform despite current industry headwinds and the company’s recent stock performance.
In other recent news, LVMH Moet Hennessy Louis Vuitton SE reported first-quarter sales figures that closely matched market forecasts, totaling 20,694 million euros. The company’s largest division, Fashion & Leather Goods, met expectations with organic sales growth of 2%.
However, the Wines & Spirits division saw a 12% decline in sales, attributed to ongoing inventory activities. UBS reiterated its neutral rating on LVMH, maintaining its price target at €849.00.
On the other hand, Goldman Sachs maintained a Buy rating on LVMH, projecting a positive trajectory for the company’s sales growth. The company expects a 3.0% increase in underlying sales for the first quarter and expects an improvement in luxury consumption trends in the United States.
Finally, Jefferies updated its stance on LVMH, raising its price target to €790 from its previous target of €695, while maintaining a Hold rating. The company expects LVMH’s market share in fashion and leather goods to remain relatively unchanged. These are among the recent developments for LVMH.
InvestingPro Insights
As LVMH Moet Hennessy Louis Vuitton SE (OTC:LVMUY) faces the volatile luxury market, recent data from InvestingPro offers a nuanced perspective on the company’s financial health and stock performance.
With a strong market capitalization of $387.99 billion, LVMH is a major force in the industry. The company’s gross margin stands at an impressive 68.8% in the trailing twelve months from 1Q2023, underscoring its ability to maintain profitability amid market pressures.
InvestingPro Tips highlights that LVMH has increased its dividend for 3 consecutive years and maintained dividend payments for 27 consecutive years, a testament to its financial resilience and commitment to shareholders. In addition, the company operates with a moderate level of debt, allowing flexibility in its operations. However, investors should note the high P/E ratio of 23.95, which suggests a premium valuation relative to near-term earnings growth.
For those looking for a comprehensive analysis, additional InvestingPro Tips are available that delve into LVMH’s financials and market position. Using the coupon code PRONEWS24, readers can access this information at a discounted price on an annual or semi-annual Pro and Pro+ subscription. This valuable resource can enable investors to make well-informed decisions about LVMH stock and the luxury goods industry in general.
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