Bullish stock picks are as rare as a diamond and sapphire-set Rolex Submariner, if Jefferies’ relaunched luxury coverage is anything to go by.
The investment bank kicked off its coverage with just two buys, while suggesting that sector growth in 2024 will be 9% below consensus.
‘Luxury’ is a broad church, but Jefferies equates it to nine blue-chip stock picks: LVMH, Richemont, Kering, Hugo Boss, Moncler, Burberry, EssilorLuxottica, Swatch Group and PRADA.
Only German designer Hugo Boss and Swiss jewellery company Richemont are buys, according to Jefferies, with the rest bagging a hold rating.
“Our relaunched luxury coverage comes at a time of hot debate for the sector. One in which demand risks in the US and Europe remain unclear, and the lack of recovery in Chinese aspirational spend frustrates,” noted Jefferies.
Analysts said that “investor nerves are unlikely to be soothed ahead of the promise of a return in Chinese mass travel becoming easier to model”.
However, Richemont should prove relatively more resilient “t given the greater store of value
benefit to hard luxury demand and the downside support from very challenged multiples”.
In Hugo Boss, analysts “see the attractions of sizeable market share gains at the less lofty end of price ranges”.