Morgan Stanley maintains LVMH stock with EUR820.00 target

On Tuesday, Morgan Stanley (NYSE:MS) reiterated its Overweight rating on LVMH (EPA:LVMH) Moet Hennessy Louis Vuitton SE (MC:FP) (OTC: OTC:LVMUY), accompanied by a steady price target of EUR820.00. The reiteration came after LVMH reported its fourth-quarter sales, which showed a modest 2% beat against consensus sales estimates. The luxury goods company’s organic growth was reported at +1% in Q4, slightly above the Visible Alpha consensus of -1.3% and matching Morgan Stanley’s estimate of 0%. With a market capitalization of $394.62 billion and impressive gross profit margins of 68.5%, LVMH maintains its position as a dominant player in the luxury goods sector. InvestingPro data reveals the company has achieved a strong financial health score of "GREAT," supported by robust operational metrics.

The Fashion & Leather Goods (F&LG) division, a key sentiment driver for LVMH stock, experienced organic sales growth (OSG) of -1% in Q4, which was better than the -2.7% consensus but did not meet the higher investor expectations that ranged between +0-3%. This performance was less robust compared to peers, with Richemont (SIX:CFR) JM noting a +10 percentage points sequential acceleration, Burberry Group Plc (OTC:BURBY) (BRBY) +13 points, and Zegna brand retail +5 points.

Geographically, the Americas saw a sequential acceleration to +3% in Q4 from +0% in Q3, Europe increased to +4% from +2%, and Asia ex Japan improved to -10% from -16%. However, Japan experienced a slowdown, decelerating to +8% from +20% in the previous quarter. On the earnings front, LVMH’s EBIT for the second half of 2024 fell short of consensus estimates by 8% at the group level and by 1% for the F&LG division.

Despite the mixed results, with some areas showing improvement and others underperforming, Morgan Stanley’s analyst noted that the LVMH brand, particularly Vuitton, held up well within the F&LG division. Further insights were anticipated from the conference call scheduled at 6 PM Paris time, where the company’s tone regarding current trading and outlook would be crucial for investors.

As of Monday’s closing price, LVMH’s valuation stood at 23.4x P/E and 16.1x EV/EBIT based on CY26 numbers. These figures are below the luxury industry average P/E of 31.7x and EV/EBIT of 22.2x, according to Morgan Stanley’s estimates. Based on InvestingPro’s Fair Value analysis, LVMH appears to be trading near its fair value, with a current P/E ratio of 27.14x and showing an impressive 8.47% return over the past week.

In other recent news, LVMH Moet Hennessy Louis Vuitton SE has experienced a flurry of activity from financial analysts. Notably, Jefferies raised the company’s stock price target to €670 while maintaining a hold rating. This adjustment came in anticipation of LVMH’s fourth-quarter update, which is expected to provide a clearer picture of the luxury market’s direction. The company has a significant influence in the luxury goods industry, boasting impressive gross profit margins of 68.5% and annual revenue of $91.7 billion.

In parallel, BofA Securities upgraded LVMH’s stock rating to buy and increased its target to €735, indicating a positive outlook for the company’s growth and profitability. This upgrade was based on improving trends in luxury demand, controlled cost growth, and a shift from foreign exchange headwinds to tailwinds. Berenberg also initiated coverage of LVMH with a buy rating, citing the company’s robust business model and growth resilience.

However, LVMH’s third-quarter revenue fell short of expectations, marking a 5% miss and an 8% decline in profit from recurring operations, totaling €10.7 billion, as reported by RBC Capital. Despite this, TD Cowen reaffirmed its buy rating on LVMH, emphasizing the stock’s favorable price-to-earnings ratio and free cash flow yield. These recent developments indicate a cautious but still promising view of LVMH’s investment appeal.

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