RBC sees luxury approaching bottom, likely inflection in 2025

Watches of Switzerland

09/12/2024 10:29

** RBC Capital Markets expects revenue momentum to continue
for sporting goods makers in 2025 while it notes that setup for
luxury is improving, driven by U.S. inflection and a no-worse
China
    ** It forecasts 5%/6% organic revenue/EBIT growth for its
luxury coverage next year, with softer H1 and better H2
    ** The broker sees luxury approaching the bottom of the
cycle, with possible stabilisation or even inflection in revenue
growth trends as early as Q4, driven by improvement in U.S. post
election, rallying asset prices
    ** LVMH  LVMH.PA  is RBC's preferred pick in luxury due to
its scale, diversified category mix, and higher U.S. revenue mix
    ** Burberry  BRBY.L  and Watches of Switzerland  WOSG.L  are
its two other preferred names in the space, with RBC citing
turnaround opportunity for the former, and 2026 setup and
valuation for the latter
    ** Among sporting goods, Adidas  ADSGn.DE  is its preferred
pick due to its double-digit revenue growth profile, improving
sources of growth and ongoing execution advantages
    

 (Reporting by Olivier Cherfan)
 ((olivier.cherfan@thomsonreuters.com))