China’s robust rebound and resilient growth across Europe are driving the performances of luxury brands across the continent, said Deutsche Bank.
Analysts at the German bank increased the target price for Richemont, which owns Cartier and Van Cleef, to CHF180 from CHF165, and Moncler to €75 from €69.
Swatch Group, however, had its target price clipped to CHF365 from CHF370.
“Key drivers of the strong sales performance have been the robust rebound in domestic China demand and more resilient growth in Europe,” the broker said.
However, Deutsche Bank cautioned that slowing growth in the US is a “building concern”, with signs of softening demand from “economically sensitive aspirational consumers.”
The strongest brands, which include Hermes, Moncler, LVMH and Richemont, have been able to show strong execution on China demand and greater resonance with younger and affluent consumers.
Underperforming names, including Kering and Ferragamo, are suggesting the impact of greater turnarounds and greater exposure to more aspirational luxury consumers.