The LVMH share price has rebounded in the past few months as investors anticipate that the recent weakness in the luxury sector is fading. The stock was trading at €685 on Wednesday, down by over 10% from the highest point this year, but up by 21% from its lowest point in November. This performance has helped to push Bernad Arnault’s net worth to $15.5 billion.
LVMH business may stabilise this year
LVMH is the biggest brands in the luxury industry. It owns popular companies like Christian Dior, Louis Vuitton, Marc Jacobs, Sephora, and Bulgari.
Its business model is different from other luxury groups in that it operates across multiple segments. While fashion and leather goods is its biggest business, it is also a big player in areas like selective retailing, watches and jewerly, and wines and spirits.
This business model helps the company’s different brands to offset each other. A weakness in selective retailing may be offset by a jump in the fashion and leather goods and watches segment.
LVMH and other luxury businesses struggled in 2024 as the sector went through a significant slowdown because of China and Europe.
This trend may start to change this year now that the Chinese economy is starting to recover. The most recent data showed that the economy expanded by 5.4% in the fourth quarter, bringing the yearly gain to 5%.
The Chinese stock market is doing well, with the Hang Seng Tech Index surging by double digits in the past few months. This surge may incentivize many people in the country to spend money on luxury items.
LVMH share price also crashed in 2024 as other markets like in Europe and the United States weakened. Its Tiffany brand has also not done well in the past few years.
LVMH earnings download
The most recent annual results showed that the company experienced some weakness in 2024 as uts total revenue dropped to €84.68 billion. Most of the decline was in its wines and spirits business whose revenue dropped by 11% to €5.8 billion.
Its fashion and leather business dropped by 3% to €41 billion, while the watches and jewerly one slowed by 3%. This slowdown was partially offset by a small increase in the perfumes and cosmetics and selective retailing business.
Most of LVMH’s business was from Asian countries, followed by the United States and Europe. Also, most of the sales were invoiced in the US dollar.
Analysts are optimistic that the company will resume growing this year. The average estimate is that its revenue will grow by 4% in the current quarter to €21.5 billion. They expect it to deliver about €89 billion in annual revenue, a 5.7% annual increase.
This performance would make LVMH a relatively undervalued company considering that it has a forward price-to-earnings ratio of 23, and an enterprise value/EBITDA of 13.6.
LVMH share price analysis
The daily chart shows that the LVMH stock price has wavered in the past few weeks. It has dropped from €762 to €685. Along the way, it has formed a symmetrical triangle pattern, which is part of a bullosh flag. A bullish flag is one of the most bullish patterns in the market.
LVMH share price has also formed a golden cross pattern, which happens when the 50-day and 200-day moving averages cross each other. Therefore, there are rising odds that it will rebound with the triangle part of the pennant pattern nearing its confluence level. If this happens, the next point to watch will be at 762. That means that the LVMH may jump by about 12% from the current level.
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