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Deutsche Bank turned more cautious on the European luxury sector ahead of the Q2 earnings season.
Analyst Matt Garland said the firm expects a slowdown, with the status of the Chinese consumer remaining one of the key drivers of the negative sentiment on the sector. Notably, signs of economic pressure in the property sector and moderating sentiment around Chinese GDP are expected to weigh on luxury consumer spending both domestically and abroad.
“Further stimulus remains the key upside risk to our forecasts but we expect the majority of any benefit (if at all) to come in 2024. For the US and European consumer, we continue to expect a normalisation in underlying growth in 2H23. We see some early signs of improving macro indicators for aspirational Luxury consumers, although we expect European demand to be less supported by US and Chinese tourism than previously.”
Deutsche Bank set its forecast for Q2 earnings in the European luxury sector below the consensus marks. The firm downgraded Moncler S.p.A (OTCPK:MONRF) on Wednesday to a Hold rating from Buy and lowered price targets on Compagnie Financière Richemont SA (OTCPK:CFRHF), Richemont, LVMH Moët Hennessy (OTCPK:LVMHF), Kering SA (OTCPK:PPRUF), and Swatch Group (OTCPK:SWGAY).
