Investing.com — European luxury stocks gained momentum recently as Goldman Sachs highlighted “moderate” growth forecast for the sector in 2025, expecting currency-adjusted sales to rise 3% are.
Despite the subdued growth outlook, this reappraisal has created selective equity investment opportunities within the industry.
The note highlights the importance of long-term structural factors such as high barriers to entry, strong brand equity, and pricing power, which provide resilience to the luxury goods sector even during periods of low growth. are.
Analysts say valuation support is starting to emerge in the sector, with current price-to-earnings ratios running about 11% below the 10-year average.
This divergence is a path for smart investors to take advantage of a potential rebound, especially as Western markets show early signs of recovery and hopes for a cyclical pick-up in Chinese demand in late 2025 grow. It opens.
Goldman Sachs’ outlook highlights the important role of China, whose recovery has been slowed by continued challenges in the real estate market and broader economic headwinds.
Similar to previous economic downturns, such as the U.S. financial crisis and Japan’s economic downturn in the 1990s, the report predicts that China’s luxury demand will begin a positive recovery in the third quarter of 2025.
This turnaround is expected to drive revenue growth, supported by improved consumer confidence and government stimulus.
Amid this complex landscape, Goldman Sachs spotlights certain companies poised to outperform, upgrading stocks like Moncler and Prada (OTC:) to buy ratings. Ta.
Brands with strong market positions, such as LVMH, Moncler and Prada, are attracting attention for their ability to increase market share at attractive valuations.
Additionally, the analysis identified defensive stocks such as Brunello Cucinelli and Zegna as well-positioned to weather short-term challenges.
Meanwhile, high-end brands that cater to resilient customer segments and those exposed to China’s expected economic recovery are considered strategic investments.
Sector dynamics in 2025 suggest that price, rather than volume, will continue to be the primary driver of growth, with an expected contribution of 3-4% to overall revenues. However, margins are expected to remain flat in the first half due to continued pressure, partially offset by improvements in the second half.
Analysts caution against seeking exposure to turnaround stories such as: kering (EPA:), offered a more cautious outlook for brands looking to regain lost market share.
This cautious optimism is tempered by risks including uncertainty around China’s recovery trajectory, macroeconomic pressures and potential regulatory challenges.
Nevertheless, the 2025 outlook provides a roadmap for discerning investors, favoring brands with defensive qualities, strong pricing strategies, and exposure to recovering regions like China.
The sector’s resilience and long-term growth trajectory, supported by strong consumer demand for luxury goods and the enduring appeal of iconic luxury brands, particularly as the market adapts to these new dynamics. European luxury goods stocks are an interesting investment.
