J.P. Morgan upgrades Moncler, lifts Ferragamo; cuts Burberry on luxury divergence

Investing.com -- J.P. Morgan on Friday upgraded outerwear group Moncler to “overweight” and Italian fashion house Ferragamo to “neutral,” while downgrading British label Burberry to “underweight,” citing widening performance divergence as the luxury industry enters a period of stabilisation after two years of volatility. 

The brokerage said 2026 should mark a stabilisation year for the sector, forecasting a return to 3-4% growth after declines, but warned that an “ever more discerning” consumer and muted pricing would help sustain polarization. 

J.P. Morgan expects performance gaps to widen across brands and categories, supporting selective stock positioning. 

The analysts maintained Richemont as top pick and kept LVMH, Hermes and Brunello Cucinelli at “neutral” or “overweight,” while reiterating “underweight” ratings on Kering and Swatch.

J.P. Morgan said Moncler, known for luxury outerwear and the Stone Island label, is set for a demand recovery in 2026, helped by expanding U.S. distribution, stronger momentum in China and favourable year-on-year comparisons related to traveler spending. 

The brokerage raised its price target to €70 from €58, implying 22% upside, and placed the stock on Positive Catalyst Watch into FY25 results on Feb. 19.

The analysts expect Q4 Moncler brand retail sales 4% ex-FX vs. consensus 3%, and project FY26 EBIT 2-4% above consensus, anticipating Stone Island to return to growth at 6% ex-FX in FY26 vs. a 0% CAGR in 2022-25.

The brokerage cited improving brand traction at Ferragamo, the Florence-based leather goods maker, after three years of weak momentum. Q3 2025 retail sales recovered from -MSD% to +MSD%, turning positive for the first time since 2022. Website activity also accelerated sharply, with time spent rising over 95% in November and visits up above 41%.

J.P. Morgan moved Ferragamo to “neutral” from “underweight” and put the stock on Positive Catalyst Watch into FY25 preliminary results expected at the end of January. 

The brokerage assigned a Dec-27 price target of €7.5, 3% below the current level, noting limited upside potential amid leadership transition and recent share price recovery.

J.P. Morgan lowered Burberry , the U.K. heritage brand, to “underweight” from “neutral,” citing fading engagement signals and rising execution risk. Burberry’s latest 2% retail LFL on a 20% decline comparison indicates stabilisation but no clear turn, the analysts said, while weekly traffic trends since September show weakening engagement.

The brokerage said the next phase of Burberry’s turnaround, moving beyond improvements in scarves and outerwear to broader fashion categories, will be more challenging amid intensified competition across major houses. 

It forecasts FY27 EBIT 5% below consensus and outer-year estimates 15% lower. J.P. Morgan set a Dec-27 price target of £9.50, implying 19% downside.