Investing.com -- Berenberg analysts have revised their outlook on the luxury goods sector for 2025, increasing price targets for several leading stocks.
The updates reflect cautious optimism amid sector-wide challenges, including weaker Chinese demand and a shifting U.S. economic landscape. Despite these headwinds, certain market segments and companies stand out as resilient.
Among the companies receiving upgraded price targets are Brunello Cucinelli, Hermès, and LVMH (EPA:LVMH).
Berenberg analysts attribute these revisions to the companies’ strong market positioning, focus on absolute luxury, and consistent performance in challenging environments.
Hermès, for instance, saw its price target rise from €2,330 to €2,600, while LVMH’s target moved from €695 to €720.
Both companies have demonstrated their ability to leverage brand strength and maintain pricing power in a competitive market.
The revisions come amid a complex macroeconomic backdrop. Berenberg analysts highlight that Chinese luxury demand, a key driver for the sector, faces sustained challenges due to demographic shifts, rising debt, and geopolitical uncertainties.
While U.S. demand shows signs of recovery, the near-term outlook remains constrained by post-pandemic spending adjustments.
The analysts also point to a divergence between aspirational and absolute luxury segments.
Companies like Hermès and Brunello Cucinelli, which cater to the high-end, absolute luxury market, are expected to continue gaining market share.
In contrast, aspirational brands face more significant challenges, given their reliance on income-sensitive consumers.
Mergers and acquisitions are likely to play a critical role in shaping the sector in 2025, with cash-rich players such as LVMH and Richemont (SIX:CFR) well-positioned to capitalize on opportunities.
However, ongoing geopolitical tensions, including the potential for new trade tariffs, add a layer of uncertainty to the sector’s outlook.