UBS sees the luxury goods industry still on the upswing after record sales
The major Swiss bank UBS remains fundamentally optimistic about European luxury goods companies.
Although the sector achieved a record turnover in the previous year, average currency-adjusted growth of a further 12 percent can be expected for 2022, wrote analyst Zuzanna Pusz in an industry study published on Monday.
She justified this with a favorable consumer environment, an increasing desire for brands – and related to this – greater power to set prices. The expert raised her profit forecast (EPS) for the luxury segment in 2022 by an average of 3 percent and raised her price targets for most industry stocks.
However, within the sector, which has recovered widely in 2021, it now advises a selective approach. Pusz continues to prefer defensive stocks like LVMH and EssilorLuxottica, as well as stocks that continue to enjoy strong brand dynamics like Prada and Richemont. On the other hand, she rates the shares in Hermes and Salvatore Ferragamo less positively than before and has downgraded them.
At Kering and Moncler, she expects the increased investments in the brands to be reflected in a continuous improvement in profitability and brand dynamics. Accordingly, it upgraded the shares of both industry companies from “neutral” to “buy” and raised the price targets significantly.
With the “Buy” rating, UBS assumes that the total return on the share (price gain plus dividend) over a twelve-month period will be at least six percent above the market return expected by UBS. “Neutral” suggests a total return of up to six percent above or below this market return.
/ edh / tih / jha /
Analyzing institute UBS.
Publication of the original study: January 9th, 2022 / 23:21 / GMT First publication of the original study: January 9th, 2022 / 23:21 / GMT
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