BofA maintains a Buy rating on LVMH, target price €675

Overview

This report is BofA Securities' company research and rating reaffirmation report on LVMH. The report believes LVMH's 1Q26 revenue performance was broadly in line with expectations; core Fashion & Leather remained negative but improved sequentially, while firmer demand from US and Chinese consumers provided support. At the same time, Middle East disruptions and weak travel spending remain short-term headwinds. BofA maintained its Buy rating and €675 target price, believing LVMH, as the industry leader in luxury goods, should benefit when demand visibility improves.

Core views

The main points are: first, LVMH's 1Q26 group revenue grew 1% organically, while Fashion & Leather declined 2%; although slightly below consensus, this was in line with BofA's expectations and improved from -3% in 4Q25. Second, US consumers moved from a slight negative growth rate to low- to mid-single-digit positive growth, while Chinese consumer demand improved to roughly flat, with local spending turning positive even as overseas spending remained weak. Third, the Middle East was hit hard by March geopolitical events, with demand in some brands or segments falling 30%-70%, dragging 1Q by about 1 percentage point. Fourth, Watches & Jewellery and Wines & Spirits beat expectations, and Sephora continued to grow, showing that the group's diversified portfolio remains resilient. Fifth, valuation sits near the low end of its historical range, and if industry revenue returns to historical high-single-digit growth, the stock has rerating potential.

Analysis framework

The report evaluates LVMH's near-term earnings quality and medium-term investment appeal through segment revenue, geographic and consumer-nationality bridges, brand performance, price tracking, peer comparison, earnings forecast revisions, and DCF/SOTP valuation. The analysis focuses not only on year-over-year growth, but also on CAGR versus 2019, 2-year CAGR, and 3-year CAGR to strip out base effects and judge the true health of luxury demand.

Methodology notes

• Performance breakdownSegment and geographic bridge

  Revenue changes broken down by business segment, region, and consumer nationality

  The report breaks LVMH revenue into Fashion & Leather, Wines & Spirits, Perfumes & Cosmetics, Watches & Jewellery, and Selective Retailing, and further analyzes marginal changes in demand from the US, China, Japan, Europe, the Middle East, and other sources.

• Valuation methodsDCF-based SOTP

  Sum-of-the-parts valuation based on DCF

  BofA uses a DCF-based sum-of-the-parts valuation and adds peer multiple references to value Fashion & Leather, Moet Hennessy, Watches & Jewellery, Selective Retailing, and Perfumes & Cosmetics separately.

• Industry cycle analysisCAGR vs 2019

  Compound growth analysis versus 2019

  The report uses CAGR versus 2019, 2-year CAGR, and 3-year CAGR to reduce post-pandemic base effects and help judge whether luxury demand has truly recovered.

• Price trackingSKU price monitoring

  Tracking price changes for core brand SKUs

  The report tracks representative SKU prices for brands such as Louis Vuitton, Dior, Celine, Rimowa, Tiffany, Bvlgari, TAG Heuer, and Hublot to assess pricing contribution and actual sales pressure.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LVMH.PA

  Covered name

  Strengths

  Global luxury leader with a strong brand portfolio, diversified businesses and geographies, strong cash generation, and valuation near the low end of its historical range.

  Weaknesses

  Fashion & Leather is still negative, travel spending remains weak, Middle East disruption is pronounced, and sales are still falling by mid-single digits.

  Comparison

  Trades at about a 17% discount to division-weighted SOTP peers and at a larger discount to Hermès; historically, LVMH has usually commanded an industry leader premium.

  Risks

  Macroeconomic slowdown, weaker brand momentum, pricing power below expectations, a China recovery slower than expected, rising rent costs, or peer multiple compression.

• Richemont

  Related positive read-through

  Strengths

  LVMH's Watches & Jewellery segment was stronger than expected; strong high-jewelry performance from Tiffany and Bvlgari provides a positive industry read-through for Richemont.

  Weaknesses

  Watches overall were still down year over year, so demand for hard luxury is not in a full recovery.

  Comparison

  The report notes that BofA recently upgraded Richemont back to Buy and included it in its 2Q26 EMEA key views.

  Risks

  If the strength in high jewelry is not sustainable, or watch demand remains weak, the positive spillover will fade.

Key data

• 1Q26 group revenue€19.1bnUp 1% organically, down 6% reported.
• Fashion & Leather 1Q26 organic growth-2%In line with BofA expectations, about 1 percentage point below consensus, and 1 percentage point better than 4Q25.
• Watches & Jewellery 1Q26 organic growth+7%About 2 percentage points above BofA and consensus expectations, with strong performance from Tiffany and Bvlgari.
• Wines & Spirits 1Q26 organic growth+5%Supported by the timing of Chinese New Year and growth in champagne and wine, but the report cautions against simple extrapolation.
• Selective Retailing 1Q26 organic growth+4%Sephora continued to grow, while DFS network optimization and the disposal of the Greater China business weighed on growth by about 2 percentage points.
• Forecast adjustmentsLess than 0.5% changes to 2026-2028 revenue, EBIT, and EPSBofA's overall estimates are largely unchanged.
• Target price€675Buy rating maintained; corresponds to 25x 24-month forward P/E.
• Current valuationAbout 20x 12-month forward P/ENear the bottom of its historical range.

Impact & implications

The implication for investors is that LVMH is still in the early stages of demand recovery: the core leather and fashion business is still under sales pressure, but improving US and Chinese demand, the resilience of jewelry and retail businesses, the quality of the brand portfolio, and the valuation discount all support a Buy rating. The report believes the market has largely priced in weaker 2025 expectations, and once industry revenue moves back toward historical high-single-digit growth, LVMH should benefit from a renewed premium for its market leadership.

Risks

• A macro demand slowdown could weigh on same-store sales and growth investment.
• Weaker brand power could lead to market share losses.
• A downward re-rating of listed peers' EV/EBITDA multiples could pressure valuation.
• Pricing power below expectations could weaken revenue and margin elasticity.
• Rent cost inflation above expectations could compress margins.
• A China recovery slower than expected could weigh on luxury demand recovery.
• Middle East geopolitical disruption and weak travel spending could continue to affect near-term revenue.

What to watch

• Whether Fashion & Leather in 2Q26 can improve from -2% to flat or better.
• Whether Dior new launches and collections under the new creative director can continue to support brand momentum.
• Whether demand improvement among US and Chinese consumers can persist, especially the divergence between local and overseas spending in China.
• Whether sales in the Middle East recover from the March shock.
• Whether travel spending improves in Europe and Japan.
• Whether the strength in high jewelry within Watches & Jewellery is sustainable.
• Whether CAGR versus 2019, 2-year CAGR, and 3-year CAGR for the industry reaccelerate.
• Whether LVMH's valuation discount narrows as demand visibility improves.