LVMH stock 'a great long-term idea', TD Cowen says

Investing.com -- LVMH is well-positioned for long-term success, despite some near-term challenges, according to analysts at TD Cowen. 

The bank maintains a positive outlook on the luxury giant, highlighting its “best-in-class brand execution,” €11 billion annual marketing budget, and significant diversification. 

In a note Wednesday, TD Cowen raised its price target for LVMH stock to €800 from €700, citing confidence in its medium-term growth prospects.

While TD Cowen acknowledges LVMH as a “great idea for the longer term,” it notes that the company faces hurdles in the near term, particularly in its Fashion & Leather Goods (F&LG) segment. 

The segment, which accounts for approximately 75% of the company’s EBIT, is projected to see a 5% decline in fourth-quarter sales, consistent with the previous quarter’s performance. 

Despite this, TD Cowen expects a moderate recovery for F&LG in FY25, forecasting sales growth of 5%, aligning with the segment’s long-term average.

The analysts attribute the anticipated recovery to ongoing innovation in LVMH’s product offerings. 

“Innovation around utility and adding versatility into products” is expected to drive growth, along with cultural relevance at Louis Vuitton, through collaborations with artists like Takashi Murakami and Nigo. 

Additionally, TD Cowen sees “early signs of aspirational customer recovery” supporting growth in 2025.

Key segments such as Tiffany & Co (NYSE:TIF ). are also said to hold promise, with innovation beyond its bridal collections and ongoing store renovations enhancing future performance. 

However, the bank notes that Dior has underperformed relative to the group and will be closely monitored for improvements.

Overall, while TD Cowen remains cautious about LVMH’s short-term trajectory, it emphasizes strong conviction in the company’s ability to deliver sustained growth and maintain its leadership in the global luxury market.

Source: Investing.com