JPMorgan sees ’material upside’ for 2 European luxury stocks, starts at Buy

Investing.com -- JPMorgan has initiated coverage on Brunello Cucinelli and Zegna Group with Overweight ratings, saying both are well placed to benefit from structural growth in the very high-end ready-to-wear segment. 

The bank said this niche is better positioned than the broader luxury sector, which is undergoing a period of “reset” and muted earnings expansion.

It set a December 2026 price target of €125 for Cucinelli, 28% above current levels, and $11 for Zegna, implying 26% upside.

“We see material upside for both stocks,” analysts led by Chiara Battistini said in a Monday note. 

The analysts emphasized the resilience of high-net-worth individuals (HNWIs), describing them as the most stable and fastest-growing part of the luxury market.

“These very wealthy customers increasingly look to receive from fashion brands scarcity, superior service, and the ultimate quality,” theyi wrote. Both companies, it added, are positioned to meet that demand through exclusivity, strong supply-chain control, and brand heritage.

For Brunello Cucinelli, JPMorgan forecasts a 13% compound annual EPS growth between 2025 and 2028, supported by loyal customers and recent capacity investments. The company’s small scale and 10% annual topline growth trajectory are seen as sustainable advantages.

Shares, down 8% year-to-date, now trade at a discount to recent history, which the bank called “an attractive entry point.” Analysts noted that Cucinelli has traditionally traded at a Hermes-like premium, making the recent pullback and current 10% discount to its historical multiples stand out.

Zegna, meanwhile, is expected to accelerate after a period of investment and wholesale restructuring. JPMorgan expects profitable growth to resume as early as the second half of 2025, driven by renewed momentum at the Zegna brand and Tom Ford.

The bank projects EBIT growth of 18% annually through 2028, with margins reaching 12%.

Analysts said their December 2026 discounted cash flow valuation indicates significant upside, with a fair value of $11. The stock currently trades at roughly a 30% discount to the broader luxury sector on 2026–27 earnings multiples, despite its estimated 20% earnings CAGR.

The note also underscored how both brands’ approaches to craftsmanship and production set them apart. Cucinelli relies on deep ties with Italian artisans, guided by what its founder calls “Humanistic Capitalism,” while Zegna operates one of the most vertically integrated supply chains in the industry through its Filiera network.

In a sector facing muted trends and limited bottom-line expansion, analysts believe these two names stand out as niche players with predictable growth profiles.