Barclays has moved to a more positive stance on two of France's largest luxury groups, upgrading LVMH and Kering on the view that company-specific measures can drive outperformance despite a subdued sector backdrop. The bank raised LVMH to Overweight from Equal Weight and increased its price target to c600 from c575. Kering was upgraded to Equal Weight from Underweight, with its price target lifted to c300 from c255.
Following the broker revisions, shares of the two houses ticked higher in Paris trading, with LVMH up about 1% and Kering gaining roughly 1.3%.
Barclays has also shifted primary coverage of both companies to analyst Viktoria Petrova. The bank set out a view of a luxury market that should expand by around 3% in 2026, before settling nearer to 4% thereafter, and said it prefers companies that can outperform that baseline through internal actions rather than relying solely on market recovery.
For LVMH the bank highlights turnaround opportunities at Tiffany and Dior, which together represent more than 15% of the group's sales. Barclays expects Tiffany to deliver about a 10% revenue compound annual growth rate through 2029, reaching c7 billion, driven by store refurbishments and improvements to assortments. Dior is forecast to climb back to its 2023 sales peak of c8.9 billion by 2029 as its creative reset gains momentum.
Barclays also noted LVMH's valuation relative to its recent price performance, pointing out that the stock has fallen approximately 26% year-to-date while the MSCI Europe index has risen around 5%. The bank estimates LVMH is trading at close to 20 times forward earnings, which it says represents roughly a 16% discount to the company's historical average. "With near-term potential catalysts pointing to an acceleration in growth, we see current levels as an attractive buying opportunity," Petrova wrote. She expects a growth inflection beginning in the second quarter of 2026 as year-on-year comparables become easier.
Kering's case is framed more around operational repair at Gucci and rigorous cost control. Barclays models a revenue compound annual growth rate of approximately 8% over fiscal years 2027 to 2029, implying about 4 percentage points of annual outperformance versus the broader luxury market. The bank also projects a substantial margin recovery, with EBIT margin nearly doubling from fiscal 2025 levels to 21.7% by fiscal 2029, a pace it says would be one year ahead of management's public guidance. Barclays attributes margin expansion in part to store closures that would lower fixed costs tied to personnel, leases and general expenses.
On profitability, Barclays forecasts an earnings-per-share compound annual growth rate of roughly 55% over the same FY27 to FY29 period. The firm adds that its 2030 assumptions still leave sales densities, revenues and margins below previous peak levels, indicating conservative long-term modelling.
Petrova warned that consensus forecasts for Kering in fiscal 2026 and 2027 remain too high, and that further downward revisions to near-term estimates may be required before the recovery thesis fully materialises. "We see '26E as a reset year as the company needs to stabilise performance," she said.
Key metrics and strategic levers cited by Barclays include targeted store refurbishments and assortment upgrades at Tiffany, a creative reset timetable for Dior to regain 2023 sales levels by 2029, and a combination of store footprint rationalisation and cost discipline at Gucci to drive margin recovery. The upgrades reflect Barclays' preference for names with visible, company-led paths to outperformance in a market the bank expects to normalize at lower growth rates than recent peaks.