In this article, we discuss the top 10 luxury stocks according to analysts along with the latest updates around the industry.
The luxury retail industry is facing significant challenges, with major brands like Burberry, Hugo Boss, and Gucci experiencing substantial drops in their profits. The decline in luxury sales, especially in Asia and the Americas, has been a major concern, with Burberry and Hugo Boss seeing notable decreases in their revenue. Other brands such as Richemont and Swatch have also reported significant downturns in sales, particularly in China. The overall luxury market index has seen a sharp decline, which indicates widespread struggles in the sector.
Luxury brands have traditionally relied heavily on Chinese consumers, who have contributed significantly to their growth. However, the slowing Chinese economy and a cautious consumer base have led to reduced spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides such as the Italian high fashion women’s clothing and accessory brand, Miu Miu, which saw a nearly 60% growth last year and a 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope that the current challenges are temporary. However, the recent performance has reminded the sector that luxury items are not immune to economic challenges, and consumer demand can fluctuate based on economic conditions and consumer confidence. Nevertheless, luxury brands are comparatively less affected by the economic conditions as most of their purchases are made by a very small group of elite consumers. You can also read our article on Top 11 Luxury Clothing Stocks to Invest in Now, where we discussed luxury consumer behavior in detail.
Top 10 Luxury Stocks According to Analysts
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with at least Moderate Buy ratings according to analysts and narrowed our list to 10 stocks with the highest average analyst price target, as of August 5. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds as of Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top 10 Luxury Stocks According to Analysts
10. Harley-Davidson, Inc. (NYSE:HOG)
Average Price Target Upside as of August 5: 19.13%
Number of Hedge Fund Holders: 29
One of the top luxury stocks on our list, Harley-Davidson, Inc. (NYSE:HOG) is a Wisconsin-based manufacturer and seller of motorcycles. The company operates through Harley-Davidson Motor Company, LiveWire, and Harley-Davidson Financial Services segments. It holds a major stake in LiveWire Motorcycles (LVWR), a company focused on electric motorcycles. The Harley-Davidson Motor Company provides a variety of motorcycles, including cruisers and sport bikes, and also supplies motorcycle parts, accessories, and clothing. Additionally, Harley-Davidson Financial Services offers both wholesale and retail financing options.
Over the years, Harley-Davidson (NYSE:HOG) has become a key player in motorcycle culture and has drawn a devoted worldwide fan base with its distinctive style, powerful engines, and customization options. Besides making motorcycles, the company also offers a range of branded merchandise that promotes a lifestyle that resonates with its community and has a stronghold in the luxury motorcycle segment.
Based on 16 analysts’ ratings, Harley-Davidson (NYSE:HOG) has a consensus rating of Moderate Buy. The average price target of $42.60 represents an upside of 19.13% from the current levels, as of August 5.
Harley-Davidson (NYSE:HOG) has been a renowned name in the motorcycle industry since 1903 and has been making significant strides with its diverse offerings. In the second quarter, the financial performance of Harley-Davidson Financial Services (HDFS) was particularly notable, with revenue increasing by $23 million, or 10%. The growth came from higher retail and commercial finance receivables and improved returns as the financial portfolio adjusted over time. Currently, HDFS finances about 70% of new and used Harley-Davidson motorcycles in North America.
In Q2, a standout achievement was the dramatic 379% rise in sales of electric motorcycles compared to the same quarter last year. LiveWire’s appeal continues to grow, as evidenced by a significant boost in unit sales, placing it as the top on-road electric motorcycle seller in the U.S. for the first half of 2024.
Harley-Davidson’s (NYSE:HOG) presence in Europe is expanding as well as the LiveWire One and Del Mar models are now available. Additionally, in late June, the company introduced the STACYC Electric Balance Bike to the EMEA market, as it aims to diversify its offerings and attract new customers. LiveWire also saw a 12% improvement in operating losses from the previous year, which reflects management’s efforts to cut costs while expanding the product range and market footprint.
Harley-Davidson (NYSE:HOG) was part of 29 hedge funds’ portfolios in the first quarter with a total stake value of $822.132 million. H Partners Management is the most prominent shareholder in the company and has a position worth $516.132 million as of Q1.
9. Ralph Lauren Corporation (NYSE:RL)
Average Price Target Upside as of August 5: 22.03%
Number of Hedge Fund Holders: 43
Ralph Lauren Corporation (NYSE:RL) is a renowned American fashion house and one of our top luxury stocks according to analysts. The company is a symbol of luxury and classic American aesthetics.
Ralph Lauren (NYSE:RL) has become a prominent global name in designing, marketing, and distributing high-end lifestyle products, including clothing, accessories, home decor, and fragrances. The company’s signature lines, like Polo Ralph Lauren and Ralph Lauren Collection, are known for luxury and refinement.
Ralph Lauren (NYSE:RL) has a Moderate Buy rating as per the consensus opinion of the 22 analysts that have covered it. As of August 5, the average price target of $195.00 represents an upside of 22.03% to the stock’s current price.
Ralph Lauren (NYSE:RL), a major player in the global apparel market, continues to show strong performance despite recent challenges. On July 25, TD Cowen analyst John Kernan lowered the price target on the stock to $196 from $202 and kept a Buy rating. This adjustment reflected broader concerns about the apparel sector in China, including policy risks and competitive pressures. Despite these challenges, the company exceeded profit expectations for the first quarter, driven by steady demand for its high-end denim and polo shirts, particularly in Europe and China.
Ralph Lauren’s (NYSE:RL) net revenue grew by 1% to $1.51 billion, surpassing analysts’ average expectation of 0.46%, according to LSEG data. The company reported earnings of $2.70 per share, higher than the anticipated $2.47.
Ralph Lauren’s (NYSE:RL) sales in Europe and Asia increased compared to the previous year, a positive sign amid weaker earnings reported by other major European luxury brands like LVMH, Hugo Boss, Burberry, and Kering. Furthermore, the company has reaffirmed its forecast for low-single-digit revenue growth for the fiscal year 2025, indicating a stable outlook.
According to Insider Monkey’s database, 43 hedge funds held stakes in Ralph Lauren (NYSE:RL) in the first quarter, with positions worth $871.800 million. With 822,521 shares of the company, valued at $154.436 million, Marshall Wace LLP is the most dominant shareholder of the company as of Q1.
8. Inter Parfums, Inc. (NASDAQ:IPAR)
Average Price Target Upside as of August 5: 29.77%
Number of Hedge Fund Holders: 22
Inter Parfums, Inc. (NASDAQ:IPAR) is a prominent player in the global fragrance industry, specializing in the development, marketing, and distribution of high-end perfumes and colognes. The company manages an extensive portfolio of prestigious brands, including Montblanc, Jimmy Choo, Coach, and Kate Spade New York, and continues to expand with new additions like Lacoste and Roberto Cavalli.
Established in 1982 by Philippe Bénacin and Jean Madar, Inter Parfums (NASDAQ:IPAR) initially focused on the mass-market perfume sector. The company pivoted in the early 1990s to specialize in selective perfumery, aiming at the luxury segment.
On August 6, the company posted record revenues of $342 million and an EPS of $1.14, outperforming the market estimates by $4.3 million and $0.09, respectively. Management also confirmed sales and earnings forecasts for the full year at $1.45 billion and $5.15 per diluted share, respectively.
On July 23, Piper Sandler predicted Inter Parfums’ (NASDAQ:IPAR) move of sticking with its prior guidance as the firm believes that management has traditionally been cautious in making such adjustments and believes that the company is doing well despite some tough economic conditions. Piper Sandler maintained its Overweight rating on the company shares and raised its price target by $1 to $151.
Apart from Piper Sandler, Jefferies also has an optimistic view on Inter Parfums (NASDAQ:IPAR) stock and believes that it is oversold and said that its industry shows strength. On July 11, Jeffries upgraded the company stock to Buy from Hold with a $140 price target.
As of August 5, all five analysts that have covered Inter Parfums (NASDAQ:IPAR) maintain a Buy-equivalent rating. The average price target of $166 shows a 20% upside from current levels.
In the first quarter, 22 hedge funds had stakes in Inter Parfums (NASDAQ:IPAR) worth $185 million. Royce & Associates holds the most prominent position in the company with 489,283 shares worth $68.75 million as of the first quarter.
Headwaters Capital Management stated the following regarding Inter Parfums, Inc. (NASDAQ:IPAR) in its fourth quarter 2023 investor letter:
“Buys: Inter Parfums, Inc. (NASDAQ:IPAR): Inter Parfums is a leading fragrance house that partners with prestige brands to develop, manufacture, market and distribute perfumes globally under licensing agreements. IPAR was founded in 1982 by Jean Madar and Phillipe Benacin, who collectively own 44% of the company. Both founders are still actively involved in the company with Mr. Madar serving as the CEO of IPAR’s US operations while Mr. Benacin is CEO of the European business, Inter Parfums SA (publicly traded European subsidiary that is 72% owned by IPAR). IPAR focuses on licensing agreements with prestige brands that already have a devoted brand following in categories outside of fragrances. IPAR typically targets brands with fragrances that have either been under-managed or are relatively nascent but have large growth potential via a dedicated fragrance strategy. IPAR’s top fragrance brands include Montblanc, Jimmy Choo, Coach, and Guess. Over the last 2 years, IPAR has added fragrance licenses with Ferragamo, DKNY, Lacoste and Roberto Cavalli, all of which should meaningfully contribute to revenue growth for the company going forward.
The fragrance market is a niche category that requires scale and expertise that is better outsourced to a third party than managed internally by leading brands. The cost to design, market and distribute a fragrance line is too expensive relative to the potential revenue from the product. While top fragrance brands can generate revenue of $1-2 billion, most successful fragrance brands generate revenue in the $10-200mm range. Despite the small size, category extension into fragrances can still be a lucrative business for brands and serves to enhance the value of the brand if managed correctly. As a result, prestige brands often enter into licensing agreements with dedicated fragrance houses such as IPAR to manage their fragrance category. IPAR leverages their internal expertise that is required to design, manufacture, market and distribute a single fragrance over many brands…” (Click here to read the full text)
