On Wednesday, Morgan Stanley raised its price target for LVMH (LVMHF) shares to €850 from €790 while maintaining an Equal-weight rating. This adjustment comes as the bank updates its outlook for the luxury goods company's first-quarter sales growth expectations. Analysts at the bank said the company's equity story is "likely de-risked."
LVMH's Group Organic Sales Growth (OSG) estimate for the first quarter of 2024 has been revised upward from 2.9% to 4.5%, surpassing the Value Added (VA) consensus of 3.5%. This revision is primarily due to a more optimistic projection for LVMH's Fashion & Leather Goods division, which includes high-profile brands such as Louis Vuitton, Dior, Celine, and Fendi. Morgan Stanley now expects a slight increase in sales for this division, having previously forecasted a minor year-over-year contraction for the first quarter of 2024.
The bank's revised forecast suggests a less significant impact from Western consumer spending compared to the fourth quarter of 2023. Despite concerns that LVMH may not have outperformed the broader luxury goods sector and could have lagged behind some of its peers, Morgan Stanley believes that a projected 2% year-over-year Organic Sales Growth for the first quarter de-risks the investment narrative for LVMH.
Investors and analysts will be looking forward to LVMH's upcoming quarterly sales report to gauge the accuracy of these projections. LVMH is expected to release its first-quarter 2024 sales figures in April, likely on Tuesday, April 11, after the Paris market closes. This report will provide further insight into the company's performance and the health of the luxury goods market as a whole.