(News Bulletin 247) – Deutsche Bank has purchased the shares of the number one luxury goods company, seeing a shift in the dynamics of the sector. The German bank is following in the footsteps of Morgan Stanley and HSBC. Bernstein, for his part, believes that LVMH stock is “the best idea” to have in the luxury sector at the end of the year.

LVMH has lost its luster on the stock market. Undermined by sharply declining sales in recent quarters, particularly within its fashion and leather goods division (-9% like-for-like in the second quarter), its stock has suffered. At the end of June, the title of the number one luxury company showed a fall of around 30% over the whole of 2025. The company even, for a time, lost its crown of first capitalization on the Paris Stock Exchange to the benefit of Hermès, a title that it has since reconquered.

The group’s appeal on the stock market has plunged in recent quarters, “sales having weakened in most divisions”, Deutsche Bank noted on Thursday. “The size advantage has been called into question and the level of price increases applied in key divisions has had a long-term impact on price perception and (on) volumes,” added the German bank.

Is LVMH going through a simple air hole or is it facing more structural difficulties? Recent analyst notes clearly argue for the first hypothesis. Many banks and research firms have recently moved to purchase (or equivalent) the stock. The company’s performance over the last few months has been enviable. Since the end of June, the stock has recovered almost 30%, and its decline in 2025 is now limited to 12%.

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The big beneficiary of the renewed market confidence

Deutsche Bank is the latest bank to revise its opinion. The German establishment switched to buying the stock on Thursday against “hold” previously while raising its price target to 635 euros from 530 euros. This gives the stock a potential of more than 15% at Thursday’s closing price.

Certainly LVMH suffered. But the German bank notes that investors have regained confidence in luxury as the third quarter results approach.

“Once it was clear that there would be a sequential improvement (from one quarter to the next, editor’s note) in like-for-like growth – even if it is largely linked to the basis of comparison – the desire to underweight the sector evaporated,” writes the establishment from across the Rhine.

“We believe that the sector’s recovery is only just beginning and that any improvement in China will lead to a further increase (….) Fundamentally, we believe that investors want to participate in the sequential recovery in sales, driven by the Chinese recovery in 2026,” continues Deutsche Bank.

The bank believes that LVMH will be the big winner from this change in market sentiment towards luxury. Especially since the group presents a very favorable basis of comparison (more than its rivals) in the second half of 2025 and the first half of 2026.

Deutsche Bank also appreciates that the company has demonstrated responsiveness “by making several changes in management and creative direction, conducting cost optimization exercises and using its strong balance sheet to carry out share buybacks.”

The group is in the process of reviewing “its pricing architecture with more limited increases on key brands and the launch of new products at lower prices, which should help improve consumer demand,” she says.

LVMH, “the best idea of ​​luxury” at the end of the year?

Deutsche Bank also believes that the “brand desire” for the big names in the fashion and leather goods division (Céline, Louis Vuitton, Loro Piana, Dior, etc.) remains “robust”.

The establishment also judges that Dior’s new artistic director, Jonathan William Anderson, has the potential to “reinvigorate the brand after a period of weakness”.

“Regarding costs, the new financial director (Cécile Cabanis, Editor’s note) presented a number of initiatives which should help to improve efficiency over several years, with certain activities, such as wines and spirits, benefiting from more drastic plans,” Deutsche Bank also writes.

So many elements to position yourself on a stock at a relatively low price, Deutsche Bank noting that the stock trades around 22 times the earnings per share expected in 2026, significantly below its historical averages.

On Thursday, Bernstein, for his part, named LVMH stock as the “best idea” to have in luxury for the fourth quarter. The research office is at “outperformance” on the stock, equivalent to buying.

Certainly, the luxury “mega-brands” have suffered a set of headwinds (weak Chinese consumption, excessive price increases) and the “major drivers of profits from LVMH, Louis Vuitton and Dior” have been “at the forefront of these dynamics”.

However, “LVMH did not spend the year 2025 idly” and has therefore taken action to counter this bad dynamic adds Bernstein.

Initiatives to revive the dynamic

“Dior is experiencing renewed energy thanks to a new creative direction, led by Jonathan William Anderson. A team led by the group’s former financial director, Jean-Jacques Guiony (a manager appreciated by analysts, Editor’s note), has been integrated into the wines and spirits division,” cites the financial intermediary in particular. Bernstein also appreciates Louis Vuitton’s initiatives, such as the spectacular “The Louis” flagship boutique in Shanghai, the sponsorship of Formula 1 or the launch of “La Beauté Louis Vuitton”, a makeup range.

“Many of the difficulties facing the luxury sector could well be reversed in the coming year. LVMH has everything it needs to hit the ground running. Even in a sector facing parallel structural changes (…) size remains king, and LVMH wears the crown,” underlines Bernstein.

Conclusion: “fears are integrated into the share price, not the recovery (of the group, Editor’s note)”.

On Tuesday, Morgan Stanley moved to “overweight”, the equivalent of buying the stock. The bank expects the “fashion and leather goods” division to once again show growth in sales in 2026 before getting closer, in 2027, to its long-term average of 10% on a comparable basis.

This increase in activity will be driven in particular by the turnarounds of two major brands, namely Céline and Dior, for which Morgan Stanley sees “green lights appearing” with the good reception of their new products. A trend that could extend to Fendi, depending on the establishment.

At the beginning of September, HSBC had already changed its opinion, switching to buy on the stock. The Sino-British bank mentioned the rebound of Dior, margins which will be defended by efforts on costs or the fact that Louis Vuitton is in the process of finding ways to revitalize traffic and interest in its brands, again citing “La Beauté Louis Vuitton” or “The Louis”. As for Goldman Sachs, the American bank had perhaps initiated a trend, by raising its purchase advice at the beginning of July.

This renewed optimism among analysts is observed as LVMH will very soon publish its sales for the third quarter. The group announced this week that it would deliver its third quarter sales on Tuesday October 14. The company will be the second CAC 40 group to present its publication during this results season, after Publicis.