On Monday, RBC Capital adjusted its price target on shares of LVMH (EPA:LVMH) Moet Hennessy Louis Vuitton SE (EPA:MC) (OTC:LVMUY), decreasing it slightly 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 a 2% increase in the MSCI over the last three months. The analyst cited a de-rating to 21 times forward P/E as a more accurate reflection of the risk/reward setup for the company.
The report anticipates that margin pressures in the Wines & Spirits and Fashion & Leather Goods segments will be significant factors in the first half of the 2024 estimates. Nevertheless, for the second half of the year, RBC Capital expresses cautious optimism, highlighting the potential for revenue acceleration, which would likely be positively received by the market. This anticipation is largely supported by favorable comparative figures from the previous year.
RBC Capital's stance on the luxury sector has been wary for some time, but the firm shows a relatively more constructive view on LVMH due to its competitive advantages. The firm also noted that its estimate for LVMH's FY24E EBIT is 2% lower, aligning with the new price target of €900.
The luxury goods company, known for its prestigious brands and high-end products, is navigating a challenging economic environment. With this revised outlook, RBC Capital signals its belief in LVMH's ability to outperform despite the industry's current headwinds and the company's recent share performance.
In other recent news, LVMH Moet Hennessy Louis Vuitton SE reported first-quarter sales figures that closely matched market projections, totaling €20,694 million. The company's largest segment, Fashion & Leather Goods, met expectations with a 2% organic sales growth.
Still, the Wines & Spirits division saw a 12% decline in sales, attributed to ongoing destocking activities. UBS reiterated its Neutral rating on LVMH, maintaining its price target at €849.00.
On the other hand, Goldman Sachs (NYSE:GS) maintained a Buy rating for LVMH, projecting a positive trajectory for the company's sales growth. The firm anticipates a 3.0% increase in underlying sales for the first quarter and expects luxury consumption trends in the United States to improve.
Lastly, Jefferies updated its stance on LVMH, raising the price target to €790 from the previous target of €695 while maintaining a Hold rating. The firm anticipates that LVMH's market share in the Fashion & Leather Goods sector will remain relatively unchanged. These are among the recent developments for LVMH.
InvestingPro Insights
As LVMH Moet Hennessy Louis Vuitton SE (OTC:LVMUY) contends with the fluctuating luxury market, recent data from InvestingPro offers a nuanced perspective on the company's financial health and stock performance.
With a robust market capitalization of $387.99 billion, LVMH stands as a significant force in the industry. The company's gross profit margin impressively holds at 68.8% over the last twelve months as of Q1 2023, underlining its ability to maintain profitability amidst market pressures.
InvestingPro Tips highlight that LVMH has raised its dividend for 3 consecutive years and has maintained dividend payments for 27 consecutive years, a testament to its financial resilience and commitment to shareholders. Moreover, the firm operates with a moderate level of debt, allowing for 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 seeking a comprehensive analysis, there are additional InvestingPro Tips available that delve deeper into LVMH's financials and market positioning. By using the coupon code PRONEWS24, readers can access these insights at a discounted rate on a yearly or biyearly Pro and Pro+ subscription. This valuable resource can empower investors to make well-informed decisions regarding LVMH's stock and the luxury goods sector at large.
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