Barclays sees LVMH stock's worst-ever start to the year as a buying opportunity

Against the background of the worst start of the year in history for shares of Louis Vuitton handbags and Christian Dior perfume manufacturer LVMH, Barclays analysts saw an opportunity to buy its securities, Bloomberg writes. They expect them to grow by more than 30% from current levels, despite the fact that the war with Iran increases uncertainty around the prospects for demand, the agency notes.

Barclays analysts led by Victoria Petrova raised their recommendation on shares of luxury holding LVMH from hold (Equal-weight rating) to buy (Overweight), pointing to the underestimated positive effects of the recovery of key brands Tiffany and Dior, Bloomberg writes. In a report for the first quarter of 2026, LVMH said the company's jewelry brand Tiffany "performed well" and the first collections of the Dior group's perfume brand under new designer Jonathan Anderson were "hugely popular."

Against this background, Petrova revised the target price of the company's securities from €570 to €600 per share. This target implies a 32.7% increase in the luxury group's securities relative to the last closing price.

LVMH's status as a key indicator of the luxury sector has been weighing on the company's shares, with investors pricing in slowing industry growth and deteriorating consumer demand amid war in the Middle East, Barclays analysts wrote. However, now, "given that the near-term potential catalysts point to accelerating growth [of the company's business], we see current levels [of LVMH shares] as an attractive buying opportunity," Petrova wrote.

LVMH shares were up 0.7% in Ma 12 trading in Paris, later slowing to 0.2%; they are down 29.5% YTD, the worst start to a year in the company's history, Bloomberg notes.

Ma 11, Bernstein analysts maintained a buy recommendation (Outperform rating) on LVMH shares with a target price of €600 per unit. This target coincides with the updated target price set by LVMH analysts Barclays, and implies growth of luxury holding securities by 32.7% relative to the last closing price.

The consensus recommendation on shares of the Paris-based company - the ratio of "buy", "hold" and "sell" ratings - has improved since the beginning of the war, as the fall in quotes forced analysts to reconsider the attractiveness of the securities from the point of view of valuation, according to data compiled by Bloomberg. Now the mood of analysts regarding LVMH shares is the most positive since January 2025, the agency notes.

LVMH shares are trading at a multiple of about 19 times forecast earnings, compared with an average of nearly 24 over the past five years, Bloomberg reports.

Nevertheless, some analysts believe that the European luxury sector is experiencing a structural decline. For example, Berenberg analysts in May recommended selling shares of luxury companies on any growth in quotations, saying that they expect the sector's valuations to decline by 25-35% on average compared to the levels of the last nine years.

In April, in its latest quarterly report, LVMH, among other things, reported a decline in sales of its key fashion and leather goods division stronger than analysts had expected, and warned of the negative impact of the war in the Middle East on demand. It is not only LVMH that is under pressure - other players in the sector, including Kering and Hermès, are also reporting weaker results and worsening demand.

This article was AI-translated and verified by a human editor