Morgan Stanley has reduced its price target for Kering to €315 from €370, reflecting what the bank described as a more challenging start to 2026 for the luxury conglomerate and fresh concerns about the timing of a recovery at Gucci.
In a note circulated on Friday, analyst Edouard Aubin wrote that "recent channel checks point to a more difficult start to the year than anticipated," singling out Gucci as the "sentiment driver" for the group. The commentary points to a discrepancy between product rollout expectations and early sales indicators.
Aubin highlighted that the introduction of new pieces from creative director Demna has brought greater market scrutiny. While Demna's initial items have reached stores, January sales data indicate that Kering and Gucci may have slipped further behind peers in performance, a development the bank flagged as a reason to temper its short-term outlook.
Given these readings, Morgan Stanley said it was "prudent to lower our estimates for the 2026-28 cycle." The house cut group sales estimates by 2% for 2026 and by 4.7% for 2027, adjustments that reflect the bank's reassessment of near-term momentum across Kering's portfolio.
Despite the reduced valuation, Aubin noted that fashion specialists remain constructive on Demna's prospects, pointing to an improvement in store traffic toward late January once a fuller assortment became available. The note also observed that Gucci has been "relatively quiet from a marketing and advertising standpoint," an approach the bank believes could change and, if it does, help accelerate the brand's momentum.
Crucially, Morgan Stanley retained an Overweight rating on Kering. The bank said the stock is trading at about 22 times next year's earnings, a multiple it considers attractive in light of potential further gains in later years. Still, the firm cautioned that many of the "easy wins" from portfolio optimisation appear to be behind the company, reinforcing the case for more conservative near-term estimates.
Contextual takeaway: The note balances short-term caution driven by Gucci's slower start and product rollout scrutiny with a view that longer-term improvement remains plausible, underpinning the unchanged Overweight stance despite the lowered price target and sales forecasts.