RBC Capital Markets downgraded LVMH Moet Hennessy Louis Vuitton to "sector perform" from "outperform," cutting its 12-month price target to €475 from €575, as weakening global luxury demand and structural margin pressures weigh on growth prospects.
The firm revised down earnings-per-share estimates across all three years in its forecast window. Fiscal 2027 EPS was cut 10% to €23.03, roughly 9% below consensus, while the fiscal 2026 estimate was trimmed 2% to €22.69 and fiscal 2028 was reduced 12% to €24.30. On a long-term basis, RBC projects EPS will grow at a 9% compound annual rate through fiscal 2030, a sharp deceleration from the average 19% annual growth rate recorded over the previous decade.
Revenue forecasts also came under pressure. RBC now expects fiscal 2027 group organic revenue growth of 3.1%, below the 4.6% consensus. In Fashion & Leather Goods — LVMH's largest segment — the firm anticipates just 1% growth for fiscal 2027, well short of the 4.1%街 expected, assuming a 2% pricing contribution offset by a 1% volume decline and a broadly flat mix effect. LVMH currently trades at 17.5 times RBC's fiscal 2027 EPS estimate, above the 16.0x implied by consensus once adjusted to RBC's lower earnings outlook.
Ahead of third-quarter results expected around Oct. 14, RBC is forecasting group revenue of €18.30 billion, up 1% organically but 2% below street expectations. Fashion & Leather Goods revenue is projected at €8.39 billion, down 2% organically and 300 basis points below consensus. By contrast, Watches & Jewellery is expected to grow 8% organically to €2.51 billion, and Perfumes & Cosmetics is seen rising 3% to €2.03 billion. Wines & Spirits is forecast to decline 2% to €1.31 billion, with Cognac and spirits down 8%. Selective Retailing is expected to rise 4% organically to €3.88 billion, though RBC notes an 8% drag from ongoing distribution rationalization.
Margin outlooks were also adjusted downward. RBC expects fiscal 2027 adjusted EBIT margin to come in at 21.7%, 80 basis points below consensus, with the gap widening to 120 basis points in fiscal 2028. The firm highlighted that LVMH's high fixed-cost base makes earnings particularly sensitive to weaker-than-expected revenue growth.
Dividend estimates were trimmed as well: fiscal 2027 dividend per share was cut to €13 from €14, and the fiscal 2028 dividend was set at €15.
RBC pointed to several macroeconomic headwinds compressing consumer spending, including the conflict in the Middle East, higher oil prices, equity market volatility, and tighter monetary policy. First-half 2026 revenue growth was concentrated in the United States and Japan, while Europe, Asia-Pacific, and China were flat to down. The firm expects U.S. growth to moderate from a high base and sees limited catalysts for a stronger recovery in other regions.
Key risks cited include a weaker-than-expected recovery at Louis Vuitton and Christian Dior Couture, further pressure on Fashion & Leather Goods margins, continued weakness in premium spirits, and potential poor capital allocation around future mergers and acquisitions.
