LVMH Moët Hennessy Louis Vuitton, or LVMH (FR:MC) (LVMUY) stock gained almost 14% as of this writing on Wednesday after the company reported stronger-than-expected Q3 sales. Overall, Q3 revenue increased 1% organically to €18.28 billion, marking the end of two consecutive quarters of decline, driven by stronger demand in China.
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LVMH is known for its iconic luxury brands like Dior, Louis Vuitton, Sephora, Fendi, Bulgari, and others. The company is primarily listed on the Euronext Paris exchange but also trades over-the-counter (OTC) in the U.S.
Luxury Sales Bounce in China
In the third quarter, LVMH’s sales in Asia, including China, rose 2%, rebounding from a 9% decline in the first half. This is a positive sign for both LVMH and the wider luxury sector.
Notably, LVMH’s CFO, Cecile Cabanis, said that demand in China remains encouraging despite broader economic challenges. Meanwhile, Morningstar analyst Jelena Sokolova noted that growth potential is strong, as Chinese consumers are “sitting on a big chunk of savings post-COVID.”
More Details from LVMH’s Q3 Performance
Across its segments, all divisions beat analysts’ estimates, including the fashion and leather goods unit, which declined just 2%, improving from a 9% drop in Q2.
Regionally, U.S. sales grew 3%, while revenue in Europe and Japan declined 2% and 13%, respectively. Japan had seen a sales boost last year as Chinese tourists benefited from the weak yen, but conditions have now normalized. Meanwhile, Cabanis noted that American tourists spent less in Europe last quarter due to the weaker dollar.
Analysts Weigh In on LVMH Results
Following the Q3 numbers, RBC Capital’s analyst Piral Dadhania reiterated his Buy rating on MC stock, predicting an upside of 3.23%. Dadhania sees these results as a “step in the right direction.”
At the same time, four-star-rated analyst James Grzinic at Jefferies raised his price target on MC stock from €470 to €530 while keeping his Hold rating.
Additionally, J.P. Morgan analysts see an overall favorable environment, expecting a stronger luxury reporting season.
Is LVMH Stock a Good Buy?
Overall, MC stock has received a Moderate Buy rating on TipRanks, backed by a total of 19 recommendations from analysts. It includes 11 Buys and eight Holds assigned in the last three months. The LVMH share price target is €571.29, which is 7.22% higher than the current trading level.
