Goldman Sachs sees 2027 rebound for European luxury stocks

Goldman Sachs has launched coverage of 10 European luxury stocks, assigning Buy ratings to just four. The bank argues that the sector's recent slowdown won't last, with 2027 expected to mark a turning point after three years of post-COVID normalization. Analysts, led by Erwan Rambourg, attribute the sales slowdown to aggressive pricing and slower innovation, rather than macroeconomic headwinds. Traditional luxury brands raised prices by about 60% between mid-2019 and mid-2026, pushing consumers toward both higher-end and more accessible brands.

Goldman forecasts organic sales growth for the sector to rise from 6% in 2026 to 7% in 2027, with mid-single-digit growth expected beyond that. Regionally, the U.S. is expected to outperform, while the Middle East will see a rebound and China will stabilize. Europe, however, remains muted apart from American tourist flows.

The four Buy-rated stocks include Richemont, with a CHF225 price target, described as the 'purest exposure to compounding jewelry growth.' LVMH received a €500 target, with analysts expecting a rebound in leather goods from 2027. Moncler was given a €62 target, citing best-in-class growth and U.S. opportunities, while Prada’s target is HK$52, with analysts calling its valuation undervalued relative to earnings growth.

Goldman initiated coverage of Kering and Brunello Cucinelli at Neutral, with Kering’s relaunch plan deemed unproven and Brunello Cucinelli’s growth seen as expensive. On the downside, Hermes and Swatch were rated Sell. Hermes’ historical double-digit growth is said to have halted, despite a 36% year-to-date share decline. Swatch was criticized for its demanding valuation and smaller scale, which analysts say impacts margin sustainability.