Credit Suisse confirms a very bleak future for the luxury sector. The famous Swiss bank today published a report on the European luxury sector, reiterating the negative opinion expressed in the past.
In fact, according to analysts, low inflation and the operations put in place by the various companies in order to contain costs will not be sufficient to relaunch the sector given the modest profit margins existing at the current state of affairs.
Going into detail, the experts of the Swiss Institute write in black and white that the efforts recently implemented will not be enough to push a recovery of the margins: "most of the investors I have met recently, whether they are hedge funds or long-only funds - yes reads in the report – are bears on the sector because the greater control of costs attempted by the companies and the possible increase in purchases in China in the first half are not sufficient to guarantee a recovery of margins in the medium term”.
Despite this, according to the data, in the last three months the short interest base has decreased on stocks such as Swatch Group, Ferragamo, and Tod's. At a general level, the only company to have shown an increase in the reference period is Richemont.
Speaking precisely of the Swiss group that brings together brands such as Cartier and Montblanc, Credit Suisse has decided to revise downwards its judgment on the giant by applying a downgrade to neutral from the previous "outperform". At the same time, the target price was reduced to 60 Swiss francs per share from the previous 80, while the operating profit estimate was set at 4% for 2016 and 8% for the following two years. Investors don't seem to like the downgrade. On the Zurich Stock Exchange, the stock dropped 2,7% to 61,35 francs.
But if Richemont cries, Lvmh smiles. The French multinational that controls many of the most famous luxury brands in the world (from Louis Vuitton to Dior, via Loro Piana, Bulgari, Fendi and Céline) has received an upgrade. Indeed, Credit Suisse's rating rose from neutral to outperform, while the target price was raised from 145 to 168 euros in view of organic growth deemed "sustainable" by experts. On the Paris Stock Exchange, the stock is currently traveling against the general trend of the list (Cac 40 -1,9%) gaining 1,67% to 147,6 euros.
