Don’t Buy European Luxury Stocks Just Yet, JPMorgan Analysts Say

It’s too early to get excited about a rebound in European luxury stocks, according to JPMorgan Chase & Co. analysts, who handed industry leader LVMH its sixth downgrade in three months.

Investors are better off holding out until the second half of 2024, JPMorgan analyst Chiara Battistini wrote in a note on Wednesday, cuttting LVMH to neutral.

“We see little scope to chase the sector in the short term,” Battistini wrote. While luxury stocks have given back some gains since the summer, the analyst is cautious given a lack of earnings upgrades and still-pricey valuations.

After a tough few months due to concerns over fading demand, luxury stocks have staged a rally since the end of October, with an index tracking the sector up nearly 10%. Gains continued on Wednesday, with LVMH reversing a near 2% drop at the open to trade slightly higher.

JPMorgan is still positive on high-end jewelry makers, with Richemont the broker’s only overweight-rated luxury stock. Battistini also recommends investors stick with sports-apparel names such as Adidas AG and JD Sports Fashion Plc.

Source from: Bloomberg