The LVMH share price rebounded strongly this week on better than expected trading results.
The luxury conglomerate announced earlier this week that sales surged over the previous year. Group revenue for the first nine months of 2021 totalled 44 billion euros, a rise of 46 percent year-on-year (see below). What comforted the market was the fact that the “United States and Asia continued to see double-digit growth.”
In other words, despite the cooling Chinese property market, consumer demand there for high-end products remain strong. This trend may persist into the year end, barring unexpected global economic development.
Margins for the business are exceptionally good, and many LVMH products (such as LV Handbags) command a large and loyal following around the world. No wonder LVMH is now the 18th largest company by market capitalisation at $383 billion – larger than the Bank of America or Nestle.
LVMH share trades in Paris (ticker MC) and the US (OTC: LVMUY).
In the UK, interesting luxury stocks included the Watches of Switzerland (LON:WOSG) or Burberry (LON: BRBY). The former has been rising to new records highs.
LVMH share was one of the exceptional winners in the aftermath of the pandemic. The stock soared to record levels after the stock market recovered in the second half of 2020.
LVMH’s uptrend was so powerful that it lasted for more than year before sentiment in the sector cooled down somewhat in August. The share is cruising nicely along the rising 40-week moving average (200-day). The latest trading update helped prices to reaffirm that trendline as support.
Going forward, however, we expect LVMH’s share price to be choppier, perhaps testing the resistance near 170 into the year-end before for settling for a period sideways consolidation.
LVMH is a collection of prestigious brands acquired over the decades by the serial dealmaker Bernard Arnault.
Strong margins aside, LVMH is also riding on the huge demand for its products in many countries such as China. The stock is thus a ‘must-have’ for many institutional investors.
According to some forecast aggregation, most brokers recommend the stock as ‘Outperform’ or ‘Buy’. In fact, more analysts are recommending the stock now than a year ago. This is a result of LVMH’s rising revenue.
In sum, the general consensus for the stock is bullish.
Source: Financial Times
Jackson has over 15 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.