LVMH Shares Face Dual Headwinds as Trading Week Begins

Shares of the luxury conglomerate LVMH opened the trading week under significant pressure, declining 4.45% at the start of Paris trading. The drop was fueled by a combination of a prominent analyst downgrade and renewed fears surrounding global trade tensions.

Broader market anxieties contributed to the sell-off. The entire European luxury goods sector faced downward pressure following reports suggesting the potential for new tariffs on exports. Competitors including Hermès and Kering also felt the weight of this geopolitical uncertainty.

Adding a company-specific risk, LVMH is involved as an unsecured creditor in the restructuring of U.S. retailer Saks Global, which has filed for bankruptcy. While the retailer is set to receive $1.75 billion in new financing, the process will involve the closure of a substantial number of stores, posing a recovery risk for LVMH.

Morgan Stanley Revises Rating and Earnings Outlook

The primary catalyst for Monday's decline was a rating change from analysts at Morgan Stanley. The investment bank moved its recommendation on LVMH from "Overweight" to "Equalweight." Strategists cited that the stock's valuation, following an upward trend since mid-2025, had reached the upper limit of its long-term historical range.

Should investors sell immediately? Or is it worth buying LVMH?

Concurrently, Morgan Stanley reduced its 2026 earnings per share forecast for the company to €23.60. This revised estimate now sits 2.6% below the current market consensus of €24.20 per share. The report further suggested that consensus estimates for the full 2026 fiscal year could see downward revisions in the coming weeks. A key factor is a potential "exceptional tax levy," which could drive the group's effective tax rate up to 32.7%.

A Shift in Market Momentum

This period of volatility marks a noticeable shift from the positive momentum LVMH enjoyed at the end of 2025, when it delivered a quarterly earnings surprise. The market is now entering a phase characterized by a normalization of demand for luxury goods. With a current price-to-book ratio of 4.64, the stock appears increasingly susceptible to broader macroeconomic shifts.

Investor focus is now turning to the upcoming release of LVMH's full-year 2025 results. These figures will be crucial in indicating whether the company's organic sales growth can stabilize. From a technical analysis perspective, the share price is testing key moving averages after falling below recent support levels in morning trading.