LVMH: share stumbles on Morgan Stanley downgrade

(CercleFinance.com) - On Friday, LVMH shares were the biggest losers on the CAC 40 after Morgan Stanley downgraded them, rounding off a difficult trading week for the luxury giant.


At around 2.10 pm, the share price fell by 1.3% to below 700 euros, bringing its decline for the week as a whole to almost 2%.

In its morning comments, Morgan Stanley said that it had downgraded LVMH from 'overweight' to 'equal weight', with a price target reduced from 860 euros to 790 euros.

According to the broker, the French group should continue to gain market share in a "structurally attractive" sector, which does not prevent it from thinking that its share price will move without much direction over the coming months.

The analyst justifies his prediction by the general deterioration in demand seen at the end of 2023, which he believes should be accompanied by a complicated start to 2024 in view of the high basis for comparison in 2023.

Morgan Stanley is also concerned about the risk posed by the group's, and the sector as a whole's, heavy dependence on Chinese consumers.

This downgrade comes after a series of unfavorable comments on the stock, with Stifel yesterday lowering its price target on the share from 800 to 775 euros, while renewing its buy recommendation.

In a note, the broker explains that it has once again revised its earnings estimates for the French group downwards in view of the recent deterioration in the luxury goods market.

Down by more than 10% over the past three months, the stock has posted a meagre gain of around 2% since the start of the year.

"We expect the shares to move sideways in the coming months", believes Alexandre Baradez, Head of Market Analysis at IG France.

It seems that the precise signal of a return to an upward trend will only come above 737 euros, he warns.



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