Why LVMH Moët Hennessy stock sank today

Stock of luxury goods LVMH Moët Hennessy (LVMUY -3.61%) don’t look too exclusive on Rooster Day. The company’s share price eroded nearly 4% at the market close, largely due to one analyst’s rather assertive price-target cut. That collapse was significantly steeper than that of S&P 500 the index, which ended the day down 0.2%.

Time for a price target cut

That analyst was Morgan Stanleyto Edouard Aubin, who cut his price target for European-listed LVMH shares to 715 euros ($790) each from his previous estimate of 760 euros ($840). That’s a change. However, Aubin maintained its equal weight (ie, hold) recommendation on the consumer staples stock.

The expert’s adjustment was due to changes in revenue and earnings before interest and taxes (EBIT) for both full-year 2024 and 2025. It now believes LVMH’s top line will fall 2% this year compared to last year, and by 3%. % in 2025. These estimates for EBIT are 3% and 4% respectively.

Much of this is due to weakness in the fashion and leather goods segment. In his new research note on LVMH, Aubin wrote:

(We believe trends have further deteriorated in the Chinese cluster, while the Americans and Europeans have improved only slightly sequentially. Anecdotally, the latest tax-free spending data showed a year-on-year deceleration year and five years globally in July.

Not in a fancy mood

According to Aubin, the Chinese market has recently been driving the growth of these products. However, overall economic growth is slowing in the large Asian country. In such environments, consumers tend to control their spending on expensive luxury items.