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Investing.com -- European luxury goods are expected to return to growth in 2026 after a flat 2025, but ratings across the sector remain largely unchanged, with Barclays keeping a neutral stance overall while maintaining divergent views on individual companies.
In a note dated Tuesday, Barclays said it expects organic growth of about 5-6% at constant foreign exchange for the luxury goods sector in 2026, following what it described as a “challenging 2025,” when sales are forecast to be flat on average.
The brokerage said it does not change ratings in the note and remains neutral on the sector at the aggregate level.
Barclays said it continues to see Richemont and Moncler as its preferred “overweight”-rated stocks and Kering as its key “underweight”-rated name. It also reinstated an “overweight” rating on Prada following the completion of the Versace acquisition.
Richemont was rated “overweight” with a price target of CHF 192. Barclays forecast organic growth of 8% for Richemont in 2026, above the sector average of 6%, supported by its jewellery division, which is expected to grow 9%.
The stock was trading at a two-year forward price-to-earnings ratio of 24.6x, about 24% above its 10-year average of 19.9x, according to the report.
Moncler was also rated “overweight” with a price target of €61. Barclays forecast organic growth of 8% for Moncler in 2026 and said the company is expected to benefit from growth in the United States. Moncler was trading at a two-year forward P/E of 21x, slightly below its 10-year average of 21.9x.
Prada was reinstated at “overweight” with a price target of HKD 68 after months of rating suspension.
Barclays said Versace, which Prada acquired, is expected to generate about €560 million of revenue in FY-26 while reporting a loss at the EBIT level, resulting in a 4% dilution to Prada’s FY-26 EBIT estimates. Prada’s shares were trading at a two-year forward P/E of 12x, about 53% below the company’s 10-year average of 25.4x.
LVMH was rated “equal weight” with a price target of €580. Barclays said it had turned “incrementally more positive” following improvements in Fashion and Leather Goods but added that estimates are “in the right place” and that it sees limited upside at current levels.
The brokerage forecast 4% constant-currency growth for the division in 2026 and an EBIT margin of 35.1%. LVMH was trading at a two-year forward P/E of 23.8x, about 11% above its 10-year average.
Hermes was also rated “equal weight” with a price target of €2,310. Barclays forecast 10% organic growth for Hermes in 2026 and an EBIT margin of about 40%. The stock was trading at a two-year forward P/E of about 40x, slightly above its historical average.
Burberry held an “equal weight” rating with a price target of GBp 1,340. Barclays said retail comparable sales returned to positive territory but noted that revenue growth has yet to show sustained momentum. Burberry was trading at a two-year forward P/E of 24.6x, about 31% above its 10-year average.
Kering remained “underweight” with a price target of €245. Barclays said the stock’s recent rally was not accompanied by earnings upgrades and noted that Kering’s two-year forward P/E of about 26x is roughly 55% above its 10-year average and the highest level in about 20 years.
Swatch was also rated “underweight,” with a price target of CHF 119. Barclays forecast a return to revenue growth and an EBIT margin of 6.5% in 2026, up from an estimated 3.4% in 2025. Swatch was trading at a two-year forward P/E of 22.9x, about 48% above its 10-year average.
Barclays said valuation across the luxury sector has become more demanding, with most companies trading above their long-term averages, while earnings revisions have yet to follow recent share price gains.
The brokerage said that while a return to growth is expected in 2026, “EPS upgrades are yet to come,” underscoring its decision to keep a neutral sector view.
