LVMH Moët Hennessy -- Louis Vuitton (LVMUY 0.23%) (LVMHF 2.23%) was being punished on Tuesday, following Monday's release of a dispiriting quarterly revenue report. In mid-session action, investors continued to sell out of the company's stock -- its American depositary receipts (ADRs) were down by nearly 4%, at a point when the benchmark S&P 500 (^GSPC 0.74%) was only sagging by 0.2%.
Lowered expectations
After news broke on Monday that LVMH's first-quarter revenue was both down from the same period a year ago and missed the consensus analyst estimate, some analysts adjusted their takes on the stock. And those modifications didn't help sentiment.
The most impactful of these seemed to be the recommendation downgrade enacted by white-shoe investment bank Morgan Stanley. After market hours Monday, the company's pundit Edouard Aubin changed his tag on LVMH to equal weight (hold, in other words) from his previous view of overweight (buy). He also significantly reduced his price target on the company's Europe-listed shares, to 590 euros ($670) apiece. Prior to that, his fair-value assessment was 740 euros ($840) per share.
According to reports, Aubin wrote in his analysis that while it's somewhat common knowledge that LVMH has been suffering from weakened demand in its once-hot market of China, consumers in the U.S. are also hesitant to spend money on luxury goods. On top of that, a generally stumbling global macroeconomy doesn't portend well for the company.
Meanwhile, other analysts reduced their price targets on LVMH. Among the cutters were UBS's Zuzanna Pusz and JPMorgan Chase pundit Chiara Battistini. Both maintained their neutral recommendations on the company.
No longer No. 1
In another blow to its prestige, LVMH's stock price swoon knocked the company from its perch as the most valuable luxury goods purveyor on this planet. It has been replaced by longtime rival Hermès, the France-based company perhaps best known as the maker of the iconic Birkin tote bag.
