On Wednesday, Goldman Sachs (NYSE:GS) adjusted its price target on LVMH (EPA:LVMH) Moet Hennessy Louis Vuitton SE (OTC:LVMUY) (Euronext Paris:MC) (OTC:LVMUY) shares, reducing it from EUR 960.00 to EUR 930.00, while continuing to recommend a Buy rating for the luxury goods company.
The revision follows LVMH's first-half 2024 results, which revealed a modest 1% growth in constant foreign exchange (cFX) for the second quarter of the year, falling short of market expectations.
The company's performance in the second quarter, with an organic sales growth of 1% cFX year-over-year, did not meet the predictions set by Visible Alpha Consensus Data and Goldman Sachs Estimates (GSE), both of which anticipated a 3% growth.
The slight underperformance was attributed to the results from LVMH's key segments. The flagship Fashion and Leather division saw a 1% cFX increase, just below the forecasted 2%.
Additionally, the Wines & Spirits division of LVMH experienced a decline, with sales dropping by 5% cFX, which was a weaker outcome than the consensus estimate of a 4% decrease but performed better than Goldman Sachs' more pessimistic expectation of a 6% fall.
The report highlighted that this downturn was due to subdued sell-in trends, particularly in the United States and China, as inventories among wholesale partners are in the process of normalization.
The Watches and Jewellery division also faced challenges, reporting a 4% cFX decrease in sales, which was slightly worse than the consensus estimate of a 3% contraction. The results across LVMH's divisions reflect the varying degrees of market pressures and the impacts of inventory adjustments on the company's overall growth trajectory.
Despite the reduction in the price target, Goldman Sachs' stance on LVMH remains positive, as indicated by the maintained Buy rating. This suggests that the financial institution continues to see value in the stock, even as it acknowledges the near-term headwinds faced by the luxury retailer.
In other recent news, LVMH Moet Hennessy Louis Vuitton SE has been the subject of various analyst notes and significant corporate developments. Citi reaffirmed its Buy rating on LVMH, maintaining a price target of EUR887.00, despite the company's second-quarter results revealing a sequential slowdown in organic sales growth. However, the firm anticipates that consensus forecasts for LVMH's full-year 2024 group sales and EBIT may be revised downwards by a low single-digit percentage.
On the other hand, UBS revised its price target for LVMH shares, reducing it from EUR844.00 to EUR800.00, while maintaining a Neutral rating. The bank's analysts anticipate a 2% earnings per share decrease for LVMH for fiscal years 2024 through 2026, mainly due to pressure within the Fashion & Leather Goods and Wines & Spirits divisions.
Adding to the developments, LVMH has acquired Swiss clock manufacturer L'Epee 1839, aiming to strengthen its presence in high-end watchmaking. This follows LVMH's recent purchase of French bistro Chez l'Ami Louis, indicating a focus on experiential luxury offerings.
First-quarter sales of €20,694 million were reported, closely aligning with market projections. These are recent developments that investors are likely to follow closely.
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