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
"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
"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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