On Wednesday, Stifel analysts led by Rogerio Fujimori downgraded LVMH (EPA:LVMH) stock from a "Buy" to a "Hold" rating, while simultaneously raising the price target to €710 from the previous €680. The adjustment comes despite the firm’s increased price target, citing a limited potential for stock price growth following a significant appreciation since November of the previous year. According to InvestingPro data, LVMH’s current market capitalization stands at $357.73 billion, with the stock trading at a P/E ratio of 27.44 and showing a year-to-date return of 10.56%.
The analysts at Stifel have revised their earnings before interest and taxes (EBIT) forecasts for LVMH for fiscal years 2025 and 2026. The revision reflects concerns over the lack of earnings upgrades and the approximately 20% share price rise from the lows experienced in November. This increase has led to a diminished upside relative to Stifel’s new price target. InvestingPro analysis shows the company maintains impressive gross profit margins of 67.03% and has received a "GOOD" overall financial health score, suggesting strong fundamental performance despite valuation concerns.
The report also highlights a growing organic growth differential between LVMH’s Fashion & Leather goods segment and other stocks that Stifel rates as "buy." This gap widened in the second half of 2024 and is expected to remain significant in the first half of 2025. Stifel notes that while the January brand heat data appears solid for Louis Vuitton, it is less promising for other brands such as Dior, Celine, and Fendi, all of which are facing a year of transition.
Furthermore, Stifel anticipates another year of transition for LVMH’s cognac division, which is under new leadership. High operating expenses and reinvestment needs in the Watches & Jewellery segment are expected to cap consensus. The analysts also observe that the momentum in return on net assets (RONA) and return on invested capital (ROIC), key drivers of valuation, peaked in the 2022-2023 period and saw a significant decline in 2024. They predict that this momentum will stabilize in 2025, remaining close to the levels seen in 2019.
In other recent news, LVMH Moet Hennessy Louis Vuitton SE (OTC:LVMUY) has been in the spotlight following its fourth-quarter results and varying analyst projections. TD Cowen raised its stock target for LVMH to €840, citing robust fourth-quarter results, notably the significant acceleration in the Watches & Jewelry and Fashion & Leather Goods segments. The firm also noted the double-digit year-to-date growth for both Tiffany and Louis Vuitton.
In contrast, JPMorgan maintained a neutral rating on LVMH stock with a price target of EUR650.00, pointing out that the company’s growth was not as robust as other brands within the sector. The firm also highlighted concerns regarding operating leverage.
Citi analysts, however, maintained a Buy rating on LVMH stock with a consistent price target of EUR763.00, despite a 20% year-over-year decline in LVMH’s earnings before interest and taxes (EBIT) for the second half of 2024. The firm anticipates a low single-digit percentage increase in total operational expenses for the full year 2025.
Meanwhile, Morgan Stanley (NYSE:MS) reiterated its Overweight rating on LVMH, accompanied by a steady price target of EUR820.00. The firm noted a modest 2% beat against consensus sales estimates in the company’s fourth-quarter report. These are recent developments in the financial landscape surrounding LVMH.
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