On Wednesday, Goldman Sachs (NYSE:GS) maintained a Buy rating for LVMH (EPA:LVMH) Moet Hennessy Louis Vuitton SE (MC:FP) (OTC: OTC:LVMUY), projecting a positive trajectory for the luxury goods company's sales growth.
The firm anticipates a 3.0% increase in underlying sales for the first quarter, closely aligned with a consensus estimate of 3.3%. This outlook is based on the expectation of a 2% constant currency (cFX) growth in LVMH's largest division, Fashion and Leather, which is consistent with market consensus.
Goldman Sachs predicts a slowdown in growth across various regions, noting the challenging comparison with the previous year, especially considering China's reopening. The firm anticipates that LVMH's management will point to the ongoing difficult macroeconomic environment, with particular emphasis on the divisions exposed to wholesale challenges.
Despite these hurdles, Goldman Sachs expects luxury consumption trends in the United States to improve. Coupled with the assumption of sustained demand from Chinese consumers, the firm believes the first quarter of 2024 could serve as a positive catalyst, reinforcing confidence for accelerated growth throughout the year. Goldman Sachs estimates a 4% cFX growth in the first half of 2024 and a 9% increase in the second half.
The analyst from Goldman Sachs underscored LVMH's robust position to capture additional market share, bolstered by strong brand momentum, an appealing mix of customer cohorts, and the ability to manage pricing effectively through product mix. This strategic positioning is expected to support the company's performance in a competitive luxury market.
InvestingPro Insights
As Goldman Sachs maintains a bullish stance on LVMH Moet Hennessy Louis Vuitton SE (LVMUY), real-time data and insights from InvestingPro provide a deeper look into the company's financial health and market position. LVMH's market capitalization stands at a robust $442.34 billion, reflecting its substantial presence in the luxury goods sector. The company's impressive gross profit margins, reported at 68.8% for the last twelve months as of Q4 2023, underscore its efficiency in maintaining profitability despite costs.
InvestingPro Tips highlight LVMH's consistent dividend growth, having raised its dividend for three consecutive years and maintaining payments for 27 consecutive years. This demonstrates a strong commitment to shareholder returns. Additionally, the company operates with a moderate level of debt, which is a positive sign for investors concerned about financial stability.
While LVMH trades at a high P/E ratio of 26.97, suggesting a premium valuation relative to near-term earnings growth, the company continues to be a prominent player in the Textiles, Apparel & Luxury Goods industry. Analysts predict profitability this year, and the company has been profitable over the last twelve months, with a high return over the last decade. For readers looking to dive deeper into LVMH's financials and performance metrics, InvestingPro offers additional tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover why LVMH's strong brand momentum and strategic positioning are set to support its performance in the competitive luxury market.
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