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Highlights

  • LVMH ADRs fell nearly 4% Tuesday, extending losses from Monday’s revenue miss and gloomy earnings report.

  • Morgan Stanley downgraded the stock and slashed its price target by 20%, citing weak demand in China and the U.S.

  • Hermès overtakes LVMH as world’s most valuable luxury goods company amid broader market pessimism.

Luxury giant LVMH Moët Hennessy Louis Vuitton (OTC:LVMUY, LVMHF) faced continued investor backlash on Tuesday after posting lackluster first-quarter earnings, triggering a sharp drop in its American depositary receipts (ADRs).

The ongoing sell-off was accelerated by a notable downgrade from Morgan Stanley, whose analyst Edouard Aubin cut his rating on LVMH from "overweight" to "equal weight" and significantly lowered the firm's price target on LVMH’s Europe-listed shares from €740 to €590 — a 20% drop.

In his note, Aubin flagged softening demand in China, once a growth engine for luxury brands, along with increasing consumer reluctance in the U.S. to spend on high-end goods. The analyst also pointed to broader macroeconomic pressures that are making global consumers more cautious.

Following LVMH's revenue miss on Monday, several other analysts also trimmed their price targets, including UBS's Zuzanna Pusz and JPMorgan's Chiara Battistini, though they maintained neutral ratings.

Compounding the company’s woes, LVMH has lost its title as the world’s most valuable luxury brand to Hermès, a longtime competitor famed for its exclusivity and high-margin accessories such as the Birkin bag. The crown change underscores a shift in investor sentiment toward brands perceived as more insulated from economic downturns.

LVMH’s quarterly report revealed declining revenue versus the prior year and below-expected sales figures, raising red flags about its growth prospects in an increasingly unpredictable economic climate.