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Investing.com - Morgan Stanley lowered its price target on LVMH (EPA:MC) stock to EUR510.00 from EUR560.00 on Thursday, while maintaining an Equalweight rating. The luxury goods maker, currently trading at $106.25, has seen its shares decline nearly 18% year-to-date, now trading near its 52-week low. According to InvestingPro analysis, the stock appears undervalued at current levels.
The research firm cited expectations of declining sales in LVMH’s Fashion & Leather Goods division, projecting a 7.5% year-over-year organic sales growth decline in the second quarter. Morgan Stanley noted this estimate aligns with what they anticipated in mid-May, suggesting the business hasn’t deteriorated further since then.
U.S. operations in May and June were described as "in line to slightly ’less bad’" compared to April, according to the research note. The firm expects its sales estimate will be close to where consensus forecasts will land in coming days, possibly 50 to 100 basis points above the consensus.
Morgan Stanley’s reduction in profit estimates for the Fashion & Leather Goods division was more significant than previously anticipated, citing a "double-whammy of operating deleverage and adverse FX" affecting the luxury goods maker. This led to the EUR50 reduction in the price target.
The firm observed that LVMH appears to be "underperforming the rest of the industry" and noted that second-quarter pressure on cross-border spending, a key demand component in the personal luxury goods space, would likely lead to earnings estimate cuts across listed luxury companies. Despite these challenges, InvestingPro data shows LVMH maintains a strong financial health score, with 8 additional key insights available to subscribers, including detailed valuation metrics and growth indicators.
In other recent news, LVMH has experienced a series of analyst downgrades and price target reductions. Barclays downgraded LVMH from Overweight to Equalweight, cutting the price target to €550, citing concerns about a slowdown in the U.S. market and challenges in the Fashion & Leather Goods division. The analyst also noted potential difficulties in the spirits and beauty sectors, leading to a 16% reduction in the fiscal year 2025 earnings per share forecast. Similarly, Morgan Stanley downgraded LVMH to Equalweight, lowering the price target to €590 following a weaker-than-expected start to the year, with all divisions underperforming market expectations. The firm anticipates a contraction in sales and operating margins for 2025, highlighting reduced demand from Chinese consumers. Bernstein, while maintaining an Outperform rating, reduced its price target to €625, attributing the change to a negative growth forecast for the Fashion & Leather Goods division and other sectors. The firm adjusted its earnings per share forecasts for 2025 and 2026 below consensus estimates, yet continues to see potential in LVMH’s stock. These recent developments reflect a cautious outlook from analysts on LVMH’s financial prospects.
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