Morgan Stanley Slashes LVMH Target Amid Luxury Sector Woes - ’Underperformance’ Shakes Confidence

Wall Street's love affair with luxury hits a snag as Morgan Stanley takes the axe to LVMH's valuation.

The move comes as high-end retail stumbles—proving even billionaires' toys aren't recession-proof.

Analysts cite 'industry underperformance' in the downgrade, though we all know that's banker-speak for 'the champagne bubble's bursting.'

Meanwhile in crypto-land, Bitcoin holders are too busy stacking sats to notice another traditional finance temper tantrum.

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LVMH is one of Europe’s largest luxury goods retailers. The group operates across six major business categories in the luxury market, including Fashion and Leather Goods, Perfumes and Cosmetics, Wines and Spirits, Watches and Jewellery, Selective Retail, and Other Activities, which include Hospitality and Travel.

Sales Outlook Dims for Fashion & Leather Goods Unit

Year-to-date, the stock has lost nearly 28% on the French bourse, drawing attention to several headwinds faced by the luxury retail sector. LVMH’s focus on luxury goods makes it even more challenging to sustain demand momentum during tough macroeconomic times.

Importantly, Aubin expects the company’s Fashion and Leather Goods segment to witness declining sales, projecting a 7.5% year-over-year organic sales decline in the ongoing quarter (Q2FY25). The analyst described the retailer’s May and June operations as “in line to slightly less bad” compared to April. He added that consensus forecasts for the June quarter will see estimate revisions in the coming days, and his estimates could be 50 to 100 basis points above consensus.

Furthermore, the analyst’s profit estimates for the division were lower than prior expectations, due to operating deleverage and unfavorable FX (foreign exchange) impacts. He also noted that a decline in cross-border travel spending by shoppers in Q2 was expected to hurt earnings for major luxury companies.

Is Louis Vuitton Stock a Buy?

Analysts remain divided on LVMH’s long-term stock trajectory. On TipRanks, MC stock has a Moderate Buy consensus rating based on nine Buys and 12 Hold ratings. Also, the average LVMH price target of €596.45 implies 31.8% upside potential from current levels.