Morgan Stanley analysts have upgraded Kering and LVMH from "equal weight" to "overweight." They say that a new wave of creativity should bring the luxury market back to a situation where "supply could create its own demand." In other words, designers' collections will still be prohibitively expensive, but a little less ugly.
Regardingr Kering, Morgan Stanley even believes that "history is changing," betting on the success of Luca de Meo, who took over at the group's helm in mid-September. In any case, that's what the market seems to be betting on, as we explained last month.
It should be noted that Luca de Meo's appointment was announced on June 15 - since then the stock has risen by a spectacular 70%. It has even risen by 100% since its low on April 9 (the low point for the markets as a whole, following the shock of "Liberation Day").
While the market seems willing to pay to see what happens, earnings forecasts have not yet been raised; they have merely stabilized.
And it would be better for Kering if earnings revisions were to occur. In the meantime, valuation multiples are rising. With a 2025 P/E ratio of 53.1x, Kering is currently trading at a higher price than Hermès (49.2x), the benchmark amongst luxury goods companies. It is the only stock that has largely escaped the slowdown that has affected the sector in recent years.
The main challenge will be the recovery of Gucci, the group's flagship brand, which has been running out of steam for several years now. In 2024, Gucci accounted for about half of Kering's revenue and two-thirds of its operating income. To achieve this, the brand is counting on its new creative director, Demna, who previously headed Balenciaga, another of its brands.
