LVMH Shares Face Dual Headwinds Ahead of Earnings

LVMH navigates Italian marketing investigation and analyst downgrades. Shares rose despite headwinds as investors await key quarterly sales data on April 13.

As LVMH prepares to release its quarterly figures, the luxury conglomerate is navigating a challenging environment marked by analyst caution and regulatory scrutiny. The stock is encountering pressure from two distinct fronts.

Italian Authorities Launch Probe into Marketing Practices

Adding to the company's challenges, Italy's competition authority, the AGCM, initiated an investigation on March 30. The probe targets two LVMH subsidiaries: Sephora and Benefit Cosmetics. Authorities allege that marketing campaigns utilizing micro-influencers were deliberately aimed at children under the age of ten. The products promoted in these campaigns included anti-aging creams and serums. Italian offices have been subject to searches. LVMH has indicated its cooperation with the investigation, though the allegations remain unconfirmed at this stage.

UBS Revises Forecasts Downward, Maintains Buy Rating

In a recent analysis, UBS strategist Zuzanna Pusz adjusted her outlook for LVMH's first-quarter performance. Her projection for organic sales growth in Q1 2026 was lowered to 1%, down from a previous estimate of 3%. Consequently, the bank's price target was reduced to €640 from €706. UBS cited negative currency effects and a demanding comparison base from the prior-year period as primary reasons for the revision. Despite the cut, the firm retains its buy recommendation, arguing that the current valuation appears attractive from a historical perspective.

Within the perfumes and cosmetics division, analysts note signs of a gradual recovery. However, the sector is not expected to immediately return to the rapid growth rates witnessed in previous years.

Market Reaction and Upcoming Catalyst

Despite the negative news flow, LVMH shares closed the latest session with a gain of 1.7%, significantly outperforming the broader CAC 40 index, which rose 0.4%. This suggests that investors may have already priced in some of the lowered expectations. All eyes are now on April 13, when the group is scheduled to publish its official quarterly sales results. This data will provide clarity on whether organic growth has indeed slowed to the 1% level or if UBS's revised estimates still prove overly optimistic.