Morgan Stanley has named its favorite in the European suite. It expects the stock to grow by 20%

Morgan Stanley has upgraded the shares of the owner of Gucci brand - French holding Kering - to "buy" and expects their growth by another 20%. The bank's analyst called Kering securities its main favorite among European luxury brands. According to him, Kering may become one of the main beneficiaries of the "surge of creativity and novelty" in the sector after two years of decline.

Morgan Stanley analyst Edouard Aubin raised his rating on Kering shares from Equalweight (at market level) to Overweight (above market), and increased his target price from €250 to €370 - that's 20% above the close on October 7, Investing.com reports. Oben named the Gucci owner's securities as his top recommendation among European luxury goods makers, Bloomberg adds.

Morgan Stanley noted that there is a new momentum in the luxury industry due to the change of creative directors at leading fashion houses. "The fashion industry pendulum appears to have swung toward more colorful, expressive and maximalist imagery, moving away from minimalism," the analyst said in a note quoted by Bloomberg. In his opinion, Kering could be one of the main beneficiaries of this "surge of creativity and novelty." Thus, in recent months, the company's shares have shown particularly strong dynamics and provided it with a record quarter against the background of the appointment of a new CEO Luca de Meo, formerly head of Renault, emphasizes Bloomberg.

Optimism in the market returned after two difficult years for the industry, which suffered from weakening demand from Chinese buyers and the impact of U.S. duties, notes Bloomberg. At the same time, Morgan Stanley warned that the luxury sector is still vulnerable - primarily to the decline in purchasing activity in the middle price segment and to currency fluctuations, including the strengthening of the euro.

At the end of trading on October 7 in Paris, Kering securities rose by almost 6% to €309.2. This became their maximum for 15 months. Since the beginning of 2025, the market value of the company has grown by 30%.

Only six of the 23 analysts tracking Kering are now advising investors to buy the stock (Buy and Overweight ratings), according to MarketScreener. 12 are neutral with a Hold rating, while the remaining five recommend selling (Underperform and Sell). The average target price of €240 is 22% below Kering's closing quote in recent trading.

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