HSBC upgrades LVMH stock to Buy on Dior’s creative potential

Investing.com - HSBC upgraded LVMH (OTC:LVMUY), a prominent player in the luxury goods industry with a market capitalization of $298 billion, from Hold to Buy and raised its price target to EUR625.00 from EUR535.00, citing expectations for a meaningful rebound at Dior starting in Q2 2026. According to InvestingPro analysis, the company maintains strong financial health with impressive gross profit margins of 66%.

The investment bank expressed confidence in Jonathan Anderson’s leadership of Dior’s creative direction, noting his menswear collection presented in late June generated more than one billion impressions. HSBC anticipates significant attention on Anderson’s upcoming womenswear collection for Dior. This creative transition comes as LVMH maintains its position as an industry leader, with InvestingPro data showing the company has consistently paid dividends for 28 consecutive years.

HSBC observed that Dior has already begun addressing creativity issues by offering more accessible price points with the Dior Toujours, Groove and D-Motion handbag ranges. The firm emphasized there is "more poetic positive potential than risk" with Anderson at the helm.

The upgrade comes amid a period of designer transitions across luxury brands, with HSBC noting that Anderson’s Dior collection will likely draw substantial attention alongside new collections from Demna for Gucci and Mr. Blazy for Chanel in the coming weeks.

According to HSBC, conversations with multi-brand distributors reveal "palpable" excitement for next year’s product launches, which is expected to drive increased store traffic even if sales conversion doesn’t immediately follow. While the stock has experienced a 16.8% decline over the past six months, InvestingPro analysis suggests the shares are currently trading below their Fair Value, potentially offering an attractive entry point for investors.

In other recent news, LVMH Moet Hennessy Louis Vuitton SE is under investigation by Hong Kong’s privacy watchdog following a data breach affecting approximately 419,000 customers. The compromised information includes customer names, passport details, addresses, email addresses, phone numbers, shopping history, and product preferences. This incident comes after a previous cyberattack on the luxury brand in South Korea. Meanwhile, TD Cowen has maintained its Hold rating on LVMH, citing challenges such as uncertainty in the Chinese market and potential flat growth in the Fashion & Leather Goods division until fiscal year 2026. Additionally, Morgan Stanley has lowered its price target for LVMH to EUR510.00, down from EUR560.00, while maintaining an Equalweight rating. The firm projects a 7.5% year-over-year decline in organic sales growth for the Fashion & Leather Goods division in the second quarter. These developments highlight ongoing challenges and considerations for LVMH in the luxury market.

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