On Tuesday, CFRA raised the price target on LVMH Moet Hennessy Louis Vuitton SE (MC:FP) (OTC: OTC:LVMUY) shares to EUR913 from the previous EUR790, while maintaining a Buy rating.
The adjustment reflects a EUR123 increase based on a 26.0 times multiple of the firm's 2024 earnings per share (EPS) estimate. This valuation is slightly above LVMH's three-year average forward price-to-earnings (P/E) multiple of 25.9x.
The firm's decision to raise the price target is backed by LVMH's strong performance in the past year, particularly noting a 25% increase in top-line growth driven by its Selective Retail segment. The segment, which includes beauty retailer Sephora and duty-free shop DFS, contributed significantly with a 76% surge in profit from operations.
CFRA has maintained its EPS estimates for LVMH at EUR35.10 for 2024 and EUR37.50 for 2025.
"We like LVMH™s valuation as we head into 2024 as the company boasts many of the top names in luxury, as well as a diversified portfolio across luxury that continues to perform and grow," said the analyst.
The acquisition of Tiffany & Co. by LVMH is also seen as a strategic move that justifies a premium multiple for the company. The analyst cites Tiffany's positive margin profile and consistent cash flow as factors that enhance LVMH's valuation.
InvestingPro Insights
As LVMH Moet Hennessy Louis Vuitton SE (OTC: LVMUY) garners attention with its upgraded price target from CFRA, real-time data from InvestingPro provides additional insights into the company's financial health and market performance. LVMH's commitment to raising dividends is reflected in its track record of increasing them for 3 consecutive years, with a notable history of maintaining dividend payments for 27 years. This consistency underscores the company's financial stability and shareholder-friendly approach.
InvestingPro data highlights LVMH's substantial market capitalization of 467.3 billion USD, which solidifies its position as a prominent player in the luxury goods industry. The company's impressive gross profit margins, standing at 68.8% for the last twelve months as of Q4 2023, further demonstrate its efficient operations and pricing power. However, investors should note that the stock's P/E ratio is currently at 28.23, indicating a high valuation relative to near-term earnings growth, with a PEG ratio of 3.41 for the same period.
Despite these considerations, LVMH's strong return over the last three months, evidenced by a 17.16% price total return, reflects positive market sentiment and the company's robust performance. The InvestingPro platform offers even more detailed analysis and tips for investors looking to delve deeper into LVMH's prospects, including an additional 14 InvestingPro Tips available for review. For those seeking to enhance their investment strategy with these insights, InvestingPro invites users to take advantage of a special offer using the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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