2023-04-24 16:30:00
Wide range of products
“Luxury stocks embody the best that the stock market has to offer at the moment,” said Lilia Petavin, European portfolio strategist at Goldman Sachs in Paris. “There is exposure to Chinese consumption, which continues to surprise us with its uptick, and strong margins thanks to its strength in the market and its impact on price (which It sells its product by manipulating either supply, demand or service to increase profit.) This distinguishes luxury goods from technology, whose profit margins have been shrinking for several quarters already.”
Demand for LVMH products — Louis Vuitton handbags, Moët Chandon champagne and Christian Dior clothing — has held up even as soaring inflation and interest rates threaten to tip the world into recession.
LVMH warned this month that its growth was slowing in the US, with demand for cognac and leather goods particularly affected, and some investors feared the stock could inevitably be hit if the economic downturn deepens.
Arnault increases his superiority over Musk.. his wealth rises to 210 billion dollars
Paradoxically, concern about a recession is now driving up LVMH’s value in dollars. The euro jumped this month to its highest level in more than a year as the US currency slumped, buoyed by growing market expectations that the flagging US economy will push the Fed up. The Fed will cut interest rates this year.
In the meantime, analysts are raising their targets for LVMH stock, in light of its sharp rise, and expect room for more gains, as 30 out of 36 analysts tracked by “Bloomberg” have a buy rating.
Ashley Wallace of Bank of America expects the stock to reach 1,000 euros next year. “(LVMH’s share price) is very cheap given the attractiveness of the luxury sector, its strong portfolio of brands and its best-in-class status,” Wallace wrote in a report on April 13.
Reaching the $500 billion mark took decades.
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