LVMH : Close to historic high

02/06/2012 | 12:57pm Opinion : Bullish above 123.5 EUR Target price : 140 EUR Stop loss: 123 EUR

EURONEXT PARIS Apparel / Accessories

The resilience of the luxury sector in last year’s downturn has been underlined by LVMH’s releases. The world's leading luxury products group reported strong sales and earnings growth driven by Asia’s market. The group’s sales are rising about 16% against 2010 and net profit grew 1% to € 3.1 billion compared with the previous year.
 
Sales grew, especially in Asia, with 27%, excluding Japan where they were flat. Profits and sales for watches and jewellery division doubled also thanks to the acquisition of Bulgari, the Italian jewellery.
LVMH’s share had never known the crisis. In fact, since mid 2008 the stock is rising more than 100%. During the crisis, the group’s strategy has been characterized by buyout’s policy, at least with last year’s acquisition of Bulgari for € 3.7 billion.
 
Technically, the share is following a bullish trend as identified by the upward trend of moving averages. The stock is close to the resistance’s area of 130.6 EUR. This psychological threshold, tested previously twice last July and during 2010, could send the security around 123.5 EUR.
This area could represent a good point of entry in a trading strategy for mid-term investors. We could aim as first target at 140 EUR and we cover the position with a stop loss under 123 EUR.  

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