Investing.com -- Stifel analysts downgraded LVMH to Hold from Buy on Wednesday, citing limited upside following a 20% rally since November and a lack of earnings upgrades.
The firm also raised its price target to €710 from €680, reflecting a 2026 P/E of 23x, in line with the stock’s ten-year average.
“We are trimming our FY25-26 EBIT forecasts for LVMH, slightly increasing our price target to €710 (from €680) and lowering our rating to Hold (from Buy),” Stifel wrote, adding that earnings revisions are likely to be capped due to various headwinds across the company’s segments.
Stifel sees another transition year ahead for Dior, Celine, and Fendi, which are undergoing creative changes, while Louis Vuitton remains a bright spot.
“Louis Vuitton should continue to outperform given its superior innovation and solid brand heat, contrasting with soft brand heat for Dior, Celine and Fendi,” the firm noted.
However, even LV’s growth faces headwinds, with tough Chinese comparables in the first half of 2025, notes Stifel.
Beyond Fashion & Leather, cognac remains under new leadership, and high reinvestment needs in Watches & Jewellery are limiting margin expansion, according to the firm.
Stifel noted that RONA/ROIC momentum peaked in 2022-23 and declined significantly in 2024, expecting it to remain at 2019 levels in 2025.
Overall, LVMH shares have re-rated to 25x 2025E P/E, above the 23x ten-year average. Stifel estimates 7% sales CAGR for 2024-27 compared to 10% in 2014-24, while EBIT growth is expected at 9% CAGR, down from 13% over the past decade.
The firm expects 2% organic growth in Fashion & Leather for Q1 2025, with earnings results due in mid-April as the next key catalyst.