HSBC Downgrades LVMH and Burberry

HSBC downgraded LVMH and Burberry shares from Buy to Hold. Shares of both companies fell by more than 2%.

The bank explains the decision by limited visibility for the second half of 2026 and a tougher year-over-year comparison base in the luxury sector. HSBC analysts believe that the improved momentum seen in the second quarter could slow down in the second half of the year.

Across HSBC's luxury sector coverage, second-quarter organic sales rose 7% year-over-year, following growth of 5.8% in the first quarter. The improvement was mainly driven by strong demand for jewelry and increased consumer activity in the US and Asia.

However, the bank expects conditions to become more challenging in the second half of the year. Key risks cited include deteriorating consumer sentiment in China, a higher comparison base, and negative social media backlash related to luxury brands.

For LVMH, HSBC cut its price target from €600 to €490. The bank believes the Fashion & Leather Goods division, which accounted for 72% of the group's EBIT in 2025, is recovering slowly. Louis Vuitton's scale also limits growth potential — the brand's sales amount to approximately €20 billion.

Burberry's price target was cut from 1,350 to 1,200 pence. HSBC acknowledges that the brand's restructuring under CEO Josh Schulman is progressing, but believes there is limited room for significant improvement in sales and profit forecasts to drive further share price gains.

At the same time, HSBC maintains its Buy rating on Richemont, Kering, Moncler, and Prada. Richemont remains the bank's favorite, supported by its strong jewelry business and effective management.