On Thursday, Morgan Stanley adjusted its outlook for luxury goods giant LVMH (EPA:LVMH) Moet Hennessy Louis Vuitton SE (OTC:LVMUY), with a notable increase in the company's price target. The firm's analyst set the new target to EUR850.00, a significant rise from the previous EUR790.00, while the stock's rating remains at Equalweight.
The revision comes after a reassessment of LVMH's performance, particularly in its Fashion & Leather Goods division, which includes prestigious brands such as Vuitton, Dior, Celine, and Fendi. Initially, a contraction in sales was expected in the first quarter of 2024; however, current projections now indicate a slight expansion. This marks a positive shift in expectations, especially considering the previous quarter's concerns over consumer spending in Western markets.
The analyst pointed out that the updated Group Organic Sales Growth (OSG) estimate for the first quarter of 2024 has been increased from the earlier prediction of +2.9% to +4.5%. This is notably higher than the Value Added (VA) consensus, which stands at +3.5%. The improved forecast is primarily attributed to the stronger performance anticipated from the key Fashion & Leather Goods division.
Despite some skepticism regarding LVMH's relative performance in the luxury goods sector, where it may not have outperformed all peers, the expectation of a +2% OSG year-over-year for the first quarter of 2024 is seen as a positive indicator. This adjustment is believed to reduce the investment risk associated with LVMH shares.
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