JPM prefers jewellery over soft luxury amid China challenges

Prada SpA

02/12/2024 09:34

** J.P.Morgan warns of another bumpy year for luxury, citing
slow Chinese spending, and says it expects jewellery makers to
perform better than fashion brands in 2025
    ** The broker forecasts around 2% growth for the sector
overall and cuts its 2025 EBIT estimates by 6% on average
    ** It upgrades Pandora  PNDORA.CO  to "overweight" from
"neutral" and remains "overweight" on Richemont  CFR.S , citing
their jewellery exposure and strong momentum
    ** It also keeps "overweight" on Prada  1913.HK  and
EssilorLuxottica  ESLX.PA  
    ** Outside of jewellery, it cuts Kering  PRTP.PA  and Swatch
 UHR.S  to "underweight" from "neutral", expecting the unstable
environment to put pressure on their already slower momentum
    ** JPM sees strong growth and margins for sportswear names
in 2025, boosted by consumer spending and price adjustment
potential
    ** It remains "overweight" on Adidas  ADSGn.DE  and On
 ONON.N , as it expects Adidas to post strong 2025 gross margin
and EBIT while On should benefit from Nike's weakness
    
RATING CHANGES:
 COMPANY        RATING       OLD RATING   PT          OLD PT
 Kering         Underweight  Neutral      EUR 195     EUR 220
 Pandora        Overweight   Neutral      DKK 1,300   DKK 1,106
 Swatch         Underweight  Neutral      CHF 135     CHF 180
 
 (Reporting by Vera Dvorakova)
 ((vera.dvorakova@thomsonreuters.com))