STOCKS NEWS EUROPE-Credit Suisse ups stance on luxury; cuts LVMH
Credit Suisse upgrades the European luxury goods sector to "overweight" from "neutral", partly on expectations for an improvement in the global economy, and recommends investors switch out of France's LVMH and into Swiss rival Richemont.
"Improvement in leading macro indicators globally (and particularly in China) and bottoming out signs in sector indicators make us believe in a scenario of modestly improving top-line momentum as 2013 progresses," the bank's strategists write in a research note.
It downgrades LVMH to "neutral" from "outperform" while upgrading Richemont to "outperform", writing that Richemont's portfolio of products is more geared to a Chinese economic recovery, while LVMH faces pressure in its champagne and cognac business.
"High margin cognac seems to be decelerating and champagne remains structurally over-exposed to western European companies," it writes.
Credit Suisse keeps a "neutral" rating on PPR and adds that Swatch and Burberry are its other preferred luxury goods stocks.
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