On Thursday, Morgan Stanley demonstrated confidence in the performance of LVMH Moet Hennessy Louis Vuitton SE (MC:FP) (OTC: OTC:LVMUY) by increasing its share price target from EUR790.00 to EUR850.00, while maintaining an Equalweight rating on the stock. The adjustment reflects a more optimistic view of the company's sales trajectory, particularly within its crucial Fashion & Leather Goods division.
The revised price target comes after a reassessment of LVMH's potential growth, with projections for the Group's Organic Sales Growth in the first quarter of 2024 being revised upward from +2.9% to +4.5%. This figure surpasses the Value Added consensus, which stands at +3.5%. The analyst pointed to a more encouraging trend for LVMH's key Fashion & Leather Goods division, which includes prestigious brands such as Vuitton, Dior, Celine, and Fendi, as a primary reason for the adjustment.
Initially, there was an expectation of a year-over-year sales contraction for LVMH in the first quarter of 2024. However, current estimates suggest a slight expansion, with less impact anticipated from Western consumers compared to the fourth quarter of 2023. This shift in expectations is seen as a positive sign for LVMH's business outlook.
Despite concerns from some investors that LVMH may not be outperforming the rest of the Luxury Goods sector and could potentially be underperforming compared to some peers, the updated forecast of a +2% OSG year-over-year in the first quarter of 2024 is viewed as a move that mitigates risk for the company's equity narrative. This revised estimate aligns with the broader reassessment of LVMH's financial health and market position.
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