Shares of the owner of Gucci have hit their highest in more than a year. What does the market expect?

Shares of French holding company Kering, which owns Gucci and other luxury brands, reached a 14-month high amid optimism around new CEO Luca de Meo. Investors expect the crisis manager to revitalize Gucci sales and cut costs. Some analysts even predict that struggling Kering could begin to recover as early as fiscal 2026

At the end of trading in Paris on September 29, Kering shares rose by 4.7% to €287.9. This became their maximum closing price since July 2024. Over the past three months, the company's securities have risen in price by more than 60% and now since the beginning of the year they are in the plus by almost 21%. At the same time, compared to the peak in 2021, the market value of Kering is still sagging by more than 60%.

Investor optimism has recently been fueled by expectations from the new CEO, who took office on September 15, Reuters notes. Market participants expect that Luca de Meo, who previously headed Renault and is known as an anti-crisis manager, will be able to revitalize sales and noticeably reduce Kering's costs.

On Monday, UBS analyst Zuzanna Pusch maintained a neutral rating on Kering shares but raised her target price - from €215 to €251 - ahead of the company's third-quarter report on Oct. 22. Although UBS's new target is 13% lower than the last close, the analyst believes Kering's flagship Gucci brand is showing new indicators of recovery. Kering's first-half results have already shown the first signs of stabilization at Gucci and tighter cost control, she said, so for the first time in a long time she did not lower her estimates for the group.

"Kering's investment case continues to evolve amid a personnel reshuffle that offers hope of stabilization after years of weakness due to Gucci," Pusch said in a commentary to Reuters. - Near-term results may show signs of stabilization with sequential slowdown in sales decline, likely outperforming rivals."

European research company AlphaValue also improved its view on Kering shares. On September 17, it changed their rating from Sell to Reduce (meaning a reduction of securities in the portfolio, but not necessarily a complete exit from the position) and kept the target price at €279 - 3% below the last close. AlphaValue analyst also praised the efforts of the new CEO, who has already made a number of notable moves in his first few days in office. For example, he reshuffled the Gucci management team and moved the Valentino Eyewear business to Kering Eyewear. These measures, he said, reinforce expectations that the company will begin to recover from fiscal 2026. The analyst raised his forecast for Kering's long-term revenue growth rate to 4.5% from 3%, while emphasizing that the market environment remains challenging.

Overall, Kering now has seven buy recommendations - three more than a month ago, FactSet shows . At the same time, half of analysts - 12 out of 25 - take a neutral stance with a Hold rating. Another six advise selling (Sell and Underweight). The average target price of €224.2 implies a 22% drop from the last closing level on September 29.

Kering's new CEO Luca de Meo has been tasked with returning the company to growth after a string of setbacks. The holding company has come under pressure from U.S. duties and weaker luxury demand in key regions, including China. Kering's sales fell 15% year-on-year in the second quarter, with revenue at flagship brand Gucci collapsing 25%. An additional risk factor is the debt load, which, according to the holding's own estimates, amounts to about €9.5 billion.

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