Bloomberg — It took LVMH almost a year and a half to regain its place as Europe’s most valuable company, surpassing Novo Nordisk. LVMH is a global company that owns several luxury brands, such as Louis Vuitton, Dior, Tiffany & Co, Sephora, Fendi and Givenchy.
The Danish pharmaceutical company’s shares fell more than 4% on Friday after its best-sellers Ozempic and Wegovy became the target of US legislation, giving Novo Nordisk a market capitalization equivalent to around US$355 billion.
Shares in LVMH, the world’s largest luxury group, fell 0.3% this Friday to a market value of US$357 billion, higher than that of Novo for the first time since September 2023.
LVMH shares have fallen 13% over the past year as the sector struggles, largely because consumers in China, its main market, have reduced their spending.
However signs of growth reinforced investor sentiment, with new earnings data from peers Richemont and Brunello Cucinelli above expectations.
“Luxury demand has experienced one of its worst years in the last decade, however, trends are progressively improving from the third quarter lows,” Bank of America’s Ashley Wallace said in a recent note, in which the analyst raised his recommendation on LVMH to buy.
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A basket of stocks assembled by Goldman Sachs that tracks the luxury sector has rebounded by more than 20% since mid-November as China’s stimulus measures raise hopes that the world’s second-largest economy can regain momentum.
Additionally, President-elect Donald Trump’s preference for lower taxes and looser regulations could also boost demand for luxury goods in the US.
“After a challenging 2024, we believe the luxury sector should benefit from a small recovery in 2025 and that LVMH, as a representative of the sector, is well positioned,” said Carole Madjo, analyst at Barclays Analysts are also becoming more optimistic about certain names.
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TD Cowen raised its recommendation on Richemont stock ahead of its earnings release, Stifel recently upgraded Hermès to buy based on the Birkin bag maker’s pricing power, and last month UBS also upgraded several names.
Novo Nordisk shares, in turn, have fallen more than 40% since reaching a record high in June last. Stocks were hurt by concerns about drug supply and pricing, as well as increased competition in obesity and diabetes medicines.
The results considered disappointing from tests of its experimental drug CagriSema caused a drop in Novo’s shares in December: .
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However, eyes will be on the next crop of results, especially on any commentary on demand in key regions, as well as whether China’s stimulus has had any impact. LVMH is expected to release full-year results on January 28.
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