Berenberg raises price targets on luxury stocks

Investing.com -- Berenberg analysts have revised their outlook on the luxury goods sector for 2025, increasing price targets for several leading stocks. 

The updates reflect cautious optimism amid sector-wide challenges, including weaker Chinese demand and a shifting U.S. economic landscape. Despite these headwinds, certain market segments and companies stand out as resilient.

Among the companies receiving upgraded price targets are Brunello Cucinelli, Hermès, and LVMH. 

Berenberg analysts attribute these revisions to the companies’ strong market positioning, focus on absolute luxury, and consistent performance in challenging environments. 

Hermès, for instance, saw its price target rise from €2,330 to €2,600, while LVMH’s target moved from €695 to €720. 

Both companies have demonstrated their ability to leverage brand strength and maintain pricing power in a competitive market.

The revisions come amid a complex macroeconomic backdrop. Berenberg analysts highlight that Chinese luxury demand, a key driver for the sector, faces sustained challenges due to demographic shifts, rising debt, and geopolitical uncertainties. 

While U.S. demand shows signs of recovery, the near-term outlook remains constrained by post-pandemic spending adjustments.

The analysts also point to a divergence between aspirational and absolute luxury segments. 

Companies like Hermès and Brunello Cucinelli, which cater to the high-end, absolute luxury market, are expected to continue gaining market share. 

In contrast, aspirational brands face more significant challenges, given their reliance on income-sensitive consumers.

Mergers and acquisitions are likely to play a critical role in shaping the sector in 2025, with cash-rich players such as LVMH and Richemont (SIX:CFR ) well-positioned to capitalize on opportunities. 

However, ongoing geopolitical tensions, including the potential for new trade tariffs, add a layer of uncertainty to the sector's outlook.

Source: Investing.com