LVMH shares ascending amidst current trading conditions today.
In a surprising turn of events, Goldman Sachs has added luxury conglomerate LVMH to its European Conviction Buy list, a move that is likely to boost the company's stock price. However, the current outlook for LVMH stock remains mixed, with recent market data and technical forecasts pointing to some near-term downside risk.
LVMH, known for its iconic brands such as Louis Vuitton, Dior, and Fendi, failed to post organic growth in any of its five categories in the first quarter of 2025. The company's first-quarter organic revenue was down 3% to 20.3 billion euros, with its fashion and leather goods segment, its biggest, seeing a 5% decline.
The struggle in luxury stocks, including LVMH, is attributed to weak consumer spending in China and pressure from the ongoing trade war. The luxury goods sector is sensitive to spending in China, the general economic cycle, and the stock market.
Despite the challenges, Goldman Sachs argues that investors should look through second-quarter softness in LVMH. The investment bank calls LVMH "a clear winner in the next luxury upcycle" and believes that the timelessness of the company's wide range of brands allows it to ride out economic volatility and continue to grow.
The recent endorsement from Goldman Sachs has had an immediate impact on LVMH's stock price. As of 12:10 p.m. ET, LVMH's stock is up 5.1%. However, the short-term technical trend indicates a potential decline. The stock is expected to fall about -11.26% over the next three months, with a 90% probability of trading between $455.12 and $502.27 by that time.
However, if LVMH maintains current levels or rises, this negative short-term forecast could improve quickly as it would break the current trend assumptions. The global economy's ability to absorb trade shifts could also cause LVMH to bounce back sooner rather than later.
Despite the mixed outlook, some analysts believe that Goldman Sachs' call for LVMH might be premature due to the highly fluid trade situation. Nevertheless, investors who focus on the longer-term outlook may view the current situation as a buying opportunity, especially if they believe in the potential for the trend to reverse positively if the price holds current levels or improves.
- Despite the short-term technical trend indicating a potential decline, Goldman Sachs encourages investors to consider LVMH as a long-term investment, viewing it as a "clear winner in the next luxury upcycle."
- The finance industry, specifically investment banks like Goldman Sachs, considers LVMH's wide range of timeless brands as a key factor allowing the company to maintain growth despite economic volatility.
- The ongoing weak consumer spending in China and trade war pressure affect not only LVMH but the entire luxury goods sector, making it sensitive to spending patterns, economic cycles, and stock market movements.
