Barclays Calls Luxury Stocks Cheap, Upgrades LVMH and Kering

Barclays upgraded LVMH and Kering on Monday, calling luxury stocks the best value proposition in a decade, CNBC reported Wednesday. The bank sees internal turnaround stories as the primary catalyst for a sector beaten down by geopolitical and macroeconomic pressure.

Sector Valuation at Multi-Year Lows

Luxury stocks have struggled under the weight of several converging forces. The Iran conflict has disrupted consumer spending across the Middle East, once a rare growth pocket for the industry. Meanwhile, sluggish momentum in China and Europe, inflation risks, and a more selective global consumer have left the sector nursing its wounds. Barclays noted that valuation multiples have fallen well below their ten-year average as a result. Incoming coverage analyst Viktoria Petrova projects the sector will recover to roughly 3% revenue growth in 2026, stabilizing around 4% annually through 2029.

LVMH and Kering Lead the Self-Help Trade

Barclays lifted LVMH to overweight, raising its price target to 600 euros from 570 euros. The bank cited creative resets at Tiffany and Dior as near-term drivers, forecasting above-average revenue growth of around 5.4% by 2029. For Kering, the upgrade to equal weight came alongside a sharper price target increase, from 255 euros to 300 euros. The bank projects Kering can grow at above-market rates of 8% through 2028. It also expects the company’s profit margin to double by 2029. New Kering CEO Luca de Meo presented a fresh strategic roadmap called “ReconKering” in April, aiming to revive the Gucci brand after a prolonged slump hit it harder than rivals. Barclays framed the recovery as execution-driven rather than dependent on a single fashion breakthrough.

Background: A Sector Searching for a New Playbook

The broader luxury industry has endured four consecutive years of growth contraction. That cycle has forced brands to reconsider strategies built on relentless expansion and aspirational pricing. Barclays described the current moment as a structural shift, arguing that the old growth model has entered a genuinely new phase requiring strategic rethinking across the board.

Richemont Favored, Hermes Faces a Price Cut

Barclays maintained its overweight rating on Richemont, praising the Cartier owner’s pricing power and jewelry leadership. The bank argued its current valuation undervalues its fundamentals. Hermes received the harshest treatment in the note. Barclays slashed its price target from 2,310 euros to 1,700 euros, keeping an equal weight rating, as recent results raised questions about its premium valuation. Hermes trades at 33 times forward earnings versus just 20 times for LVMH.

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