Barclays has upgraded its recommendations on LVMH (EU:MC) and Kering (EU:KER), saying both luxury groups are well positioned to outperform a slowing sector through internal restructuring efforts and brand recovery initiatives.
The bank raised its rating on LVMH to Overweight from Equal Weight and increased its price target to €600 from €575. Kering was upgraded to Equal Weight from Underweight, while its target price was lifted to €300 from €255.
Shares in both companies advanced in Paris trading, with LVMH gaining 1% and Kering rising 1.3%.
Barclays also announced that analyst Viktoria Petrova has taken over primary coverage of the two luxury groups.
Barclays Sees Moderate Luxury Market Growth Ahead
The bank expects the broader luxury sector to expand by around 3% in 2026 before stabilising near 4% growth levels in the longer term.
Against that backdrop, Barclays said it is favouring companies capable of outperforming the sector through brand-specific and operational improvements rather than relying solely on industry-wide demand recovery.
For LVMH, Barclays highlighted recovery potential at Tiffany and Dior, which together represent more than 15% of group revenue.
The bank expects Tiffany to generate annual revenue growth of roughly 10% through 2029, eventually reaching around €7 billion in sales, supported by store renovations and product assortment improvements.
Dior, meanwhile, is projected to return to its 2023 sales peak of €8.9 billion by 2029 as the brand’s creative repositioning gains momentum.
Barclays also noted that after falling 26% since the start of the year — compared with a 5% gain for MSCI Europe — LVMH is currently trading at roughly 20 times forward earnings, representing an estimated 16% discount to its historical valuation average.
“With near-term potential catalysts pointing to an acceleration in growth, we see current levels as an attractive buying opportunity,” Petrova wrote.
The analyst added that she expects growth momentum to improve from the second quarter of 2026 as year-on-year comparisons become more favourable.
Barclays Expects Gucci Restructuring to Support Kering Recovery
Barclays’ outlook for Kering is centred more heavily on cost control measures and operational restructuring at Gucci.
The bank forecasts revenue compound annual growth of around 8% between fiscal years 2027 and 2029, implying annual outperformance of roughly four percentage points relative to the wider luxury sector.
Barclays also expects Kering’s EBIT margin to almost double from fiscal 2025 levels to 21.7% by fiscal 2029, reaching that target a year earlier than management’s own guidance.
According to the bank, store closures and restructuring efforts are expected to reduce fixed costs related to staffing, leases and administrative expenses.
Petrova also projected earnings per share compound annual growth of approximately 55% over the same period, while noting that Barclays’ 2030 forecasts still assume sales productivity, revenues and margins below previous peak levels.
At the same time, the analyst warned that market expectations for Kering in fiscal years 2026 and 2027 remain “too high,” indicating that additional downward revisions may still be necessary before a broader recovery takes hold.
“We see ’26E as a reset year as the company needs to stabilise performance,” Petrova said.
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