Deutsche Bank announced across-the-board reductions to price targets for major European luxury groups on Wednesday, saying geopolitical developments in the Middle East have compounded an already softening sales backdrop for the first quarter.
The lender applied its deepest cut to LVMH, trimming the target to €620 from €705. Hermès was reduced to €2,320 from €2,360. Both companies retained "buy" ratings. Burberry Group's target was moved down to 1,480p from 1,550p, and the stock likewise kept a "buy" recommendation.
- Moncler saw its target lowered to €55 from €57.
- Kering's target was reduced to €290 from €295.
Moncler and Kering were both held at "hold." Overall, Deutsche Bank noted the broader luxury sector has fallen between 15% and 25% year-to-date.
Deutsche Bank analyst Adam Cochrane said expectations for a clear sequential recovery in constant-currency (cFX) sales had already diminished after fiscal year reporting and mixed commentary around Lunar New Year, but were then "firmly upended by the conflict in the Middle East."
Reflecting that environment, Deutsche Bank cut its estimate for first-quarter sector sales growth to approximately 3% from 6%. Cochrane added that "much of this is baked into expectations and valuations."
On valuation, the bank pointed out the sector - excluding Hermès - trades at about 21x calendar year 2026 price-to-earnings against roughly 10% expected EPS growth, which Cochrane described as "at the cheaper end of its trading range." He characterized the recent share-price moves as "largely a cyclical de-rating."
Despite that cyclical weakness, Deutsche Bank expects the sector's growth dynamics to return, driven by consumers in the U.S. and China; however, Cochrane cautioned that "the timing remains uncertain."
Summary takeaway: Deutsche Bank reduced price targets and tempered its near-term sales outlook for European luxury names after a combination of weaker seasonal demand signals and renewed geopolitical disruption, while noting valuations have already adjusted and long-run demand drivers could reassert themselves when uncertainty eases.