(Alliance News) - Analysts at Stifel deem it "too early" to buy into some of the leading luxury goods stocks in Europe again, as they are yet to see "a clear inflection point" as far as turnaround potential goes.
Stifel did, however, see a "limited scope for positive surprises" in the upcoming earnings for both LVMH and Richemont, both of which it rates at 'buy' rating. They each are showing signs of improved top- and bottom-line momentum into the second half of 2024. It also rates Hugo Boss at 'buy'.
But many stocks in the sector, including Hermes, Kering, Moncler and Burberry, for now have a 'hold' rating.
Stifel's sector update included findings from its brand 'heat tracker'.
As of March, website traffic momentum has varied with Brunello Cucinelli enjoying strong growth over the last year, while Hermes and Louis Vuitton struggled.
And across social media platforms the different brands analysed have largely been seen continuing to develop their fan base, albeit to different extents.
"Our luxury brand heat tracker shows no clear inflection point for potential turnaround stories at the end of 1Q24, hence we feel it is still too early to buy stocks like Kering, Burberry or Ferragamo," Stifel said.
In the upcoming quarterly earnings, a range of outcomes are expected, Stifel said.
While Moncler is forecast by Stifel to see growth of 11%, though it expects "contrasting fortunes" by brand.
Kering has already announced a 10% decline in sales in the first quarter.
Kering, which owns Gucci as well as Yves Saint Lauren, last month said while it expected the first half of 2024 to "be challenging," current trends mean first quarter revenue is likely to decline by around 10% on a comparable basis, from last year's first quarter.
Kering's outlook statement came ahead of its quarterly sales report due on April 23.
"Market focus should be on Gucci in Asia and the initial impact from Sabato de Sarno's new collections," Stifel added.
Elsewhere, Hermes, which updates the market two days after Kering, is expected to achieve 14% sales growth at constant currency, Stifel predicted.
The broker, however, said Hermes would need "material consensus upgrades" to justify its already lofty valuation.
London-listed Burberry reports annual results in May. Stifel expects Burberry to post a 12% retail comparable sales decline in the fourth-quarter.
It is more positive on LVMH, Cartier owner Richemont and Hugo Boss.
For Hugo Boss, meanwhile, it expects the fashion house to report 5% first-quarter sales growth at constant rates.
Richemont's annual numbers are expected to show 2% constant currency sales growth at the key Jewellery Maisons division.
At LVMH, Stifel predicts 3% organic sales growth for the group, in line with consensus, during the first-quarter. For the Fashion & Leather Goods offering alone, it expects a 3% rise, ahead of the 2% forecast by consensus.
By Elijah Dale, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2024, Alliance News
IN THE KNOW: Stifel likes LVMH but less keen on Burberry and Kering
(Alliance News) - Analysts at Stifel deem it "too early" to buy into some of the leading luxury goods stocks in Europe again, as they are yet to see "a clear inflection point" as far as turnaround potential goes.
Stifel did, however, see a "limited scope for positive surprises" in the upcoming earnings for both LVMH and Richemont, both of which it rates at 'buy' rating. They each are showing signs of improved top- and bottom-line momentum into the second half of 2024. It also rates Hugo Boss at 'buy'.
But many stocks in the sector, including Hermes, Kering, Moncler and Burberry, for now have a 'hold' rating.
Stifel's sector update included findings from its brand 'heat tracker'.
As of March, website traffic momentum has varied with Brunello Cucinelli enjoying strong growth over the last year, while Hermes and Louis Vuitton struggled.
And across social media platforms the different brands analysed have largely been seen continuing to develop their fan base, albeit to different extents.
"Our luxury brand heat tracker shows no clear inflection point for potential turnaround stories at the end of 1Q24, hence we feel it is still too early to buy stocks like Kering, Burberry or Ferragamo," Stifel said.
In the upcoming quarterly earnings, a range of outcomes are expected, Stifel said.
While Moncler is forecast by Stifel to see growth of 11%, though it expects "contrasting fortunes" by brand.
Kering has already announced a 10% decline in sales in the first quarter.
Kering, which owns Gucci as well as Yves Saint Lauren, last month said while it expected the first half of 2024 to "be challenging," current trends mean first quarter revenue is likely to decline by around 10% on a comparable basis, from last year's first quarter.
Kering's outlook statement came ahead of its quarterly sales report due on April 23.
"Market focus should be on Gucci in Asia and the initial impact from Sabato de Sarno's new collections," Stifel added.
Elsewhere, Hermes, which updates the market two days after Kering, is expected to achieve 14% sales growth at constant currency, Stifel predicted.
The broker, however, said Hermes would need "material consensus upgrades" to justify its already lofty valuation.
London-listed Burberry reports annual results in May. Stifel expects Burberry to post a 12% retail comparable sales decline in the fourth-quarter.
It is more positive on LVMH, Cartier owner Richemont and Hugo Boss.
For Hugo Boss, meanwhile, it expects the fashion house to report 5% first-quarter sales growth at constant rates.
Richemont's annual numbers are expected to show 2% constant currency sales growth at the key Jewellery Maisons division.
At LVMH, Stifel predicts 3% organic sales growth for the group, in line with consensus, during the first-quarter. For the Fashion & Leather Goods offering alone, it expects a 3% rise, ahead of the 2% forecast by consensus.
By Elijah Dale, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2024, Alliance News