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Research Market strategy
by Swissquote Analysts
Morning News

LVMH 3Q Revenue Fell, But Some Areas Returned to Growth

Topic of the day

LVMH Moet Hennessy Louis Vuitton SE said Thursday that revenue declined organically in the third quarter compared with the same period of the previous year, but noted a return to growth in some areas following a difficult first half affected by the coronavirus pandemic. The French luxury-goods conglomerate posted revenue of 11.96 billion euros ($14.05 billion) for the quarter, down from EUR13.32 billion in the same period of 2019. That was better than analysts' expectations of EUR11.37 billion, according to a consensus estimate provided by FactSet and based on four analyst estimates. Revenue fell 7% organically year-on-year, the company said. LVMH, which owns the Louis Vuitton, Dior, Bulgari and Hennessy brands, said growth returned in cognac sales and in the fashion and leather goods division, which saw 12% organic growth in sales from the same period of 2019.


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Swiss stocks

The SMI crashed 2.2 percent to 10,068 points with 19 stocks lower Thursday as coronavirus worries resurfaced. Traders worried about the dramatic rise in new infection numbers – fearing risks to economic recovery if politicians reintroduced drastic restrictions. Another downside factor was the Swiss franc’s upvaluation against the euro. Roche tumbled 3.5 percent after its Q3 figures were poorly received, especially its revenue figures. Analysts and traders said Roche was one of the few pharmaceutical firms that only profited from the coronavirus pandemic in a few subsegments, including its Covid-19 tests. Competitor Novartis slumped 2.44 percent. Only Lonza bucked the trend, rising 1.6 percent after an upbeat investor update event. Its 2023 outlook was well received, and analysts said Lonza was resolutely pursuing its development into a dedicated pharma and biotech firm. Second-tier Temenos slumped 4.9 percent despite a two-step analyst upgrade to “buy”. Meyer Burger fell 5.9 percent.

International markets

Europe

European stocks fall as Wall Street drops amid fears about the economic outlook for the rest of the year due to fresh coronavirus restrictions. The Stoxx Europe 600 retreats 2%, the FTSE 100 is down 1.7%, the CAC-40 falls 2.1% and the DAX backtracks 2.5%. Siemens Healthineers AG said Thursday that Varian Medical Systems Inc.'s stockholders approved its planned takeover. The medical technology spinoff of the German conglomerate Siemens AG said in August that it plans to acquire the U.S.-based company for $16.4 billion. Varian said in a statement that the deal is expected to close in the first half of next year. Publicis Groupe's statement that it should be cautious about the fourth quarter as it might come below 3Q amid a resurgence in coronavirus infections makes sense, Citi says. "Looking into the 4Q, Publicis is quite rightly trying to keep a lid on expectations," Citi says. The French advertising company also says it could deliver a 2020 operating margin rate slightly ahead of consensus of 14.3%, with Citi projecting 14.4%. Publicis shares trade 3.2% lower at EUR29.80.

United States

U.S. stocks dropped Thursday as tightening coronavirus lockdowns in Europe and a weakening jobs picture in the U.S. cast a shadow on markets. Major indexes recorded a third consecutive day of declines as investors pulled back from the big technology stocks that have helped propel the market this year. The S&P 500 fell 5.33 points, or 0.2%, to 3483.34, dragged lower by the health care, communication services and technology sectors. The Dow Jones Industrial Average edged down 19.80 points, or 0.1%, to 28494.20. The tech-heavy Nasdaq Composite dropped 54.86 points, or 0.5%, to 11713.87. Morgan Stanley on Thursday said its quarterly profit rose 25% from a year ago, another big U.S. bank to skate unscathed through the rockiest economy in years. Profit of $2.72 billion, or $1.66 a share, was higher than a year ago and beat analysts' forecasts. Revenue was $11.66 billion. Morgan Stanley rounded out third-quarter earnings reports from the nation's big banks, which have weathered the pandemic better than many of the clients they serve. Tiffany & co. (TIF) offered guidance for the fourth quarter on Thursday, saying it expects a mid-single digit percentage decline in sales compared with the year-earlier period and a mid-single digit percentage increase in operating earnings. The jewelry company expects per-share earnings to rise by a mid-to-high single digit percentage. The current FactSet consensus of $1.73 is a 3.6% increase from last year's number. "While we still expect full-year results to be substantially impacted by COVID-19, we are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in Mainland China, and to recover in the United States," Chief Executive Alessandro Bogliolo said in a statement.

Asia

Japan's Nikkei Stock Average was down at closing, weighed by falls in pharmaceutical and real-estate stocks. A resurgence of coronavirus infections and tightening of movement restrictions in some parts of the world has dampened risk appetite in stock markets. South Korea's Kospi was down as well after opening higher. Stocks were mixed with steel companies up while auto shares were down. Bargain hunting was supporting the main bourse that has slid for three consecutive sessions, but the prospect of fresh restrictions in Europe in the wake of rising new coronavirus cases there was dampening sentiment. South Korea's bleak jobs data also added to the downbeat mood, with the number of jobs shrinking for the seventh straight month in September. Steelmakers were higher.

Bonds

The 10-year Treasury yield erased losses and climbed to 0.73% Thursday after starting the day below 0.70%, snapping a two-day downward streak. There was no clear catalyst, as investors grappled with disappointing economic data and a protracted negotiations over stimulus,

Analysis

CS lowers the ASML target to 370 (375) EUR – Outperform
CS rises the Signify target to 32 (19) EUR – Underperform
HSBC rises the Volvo target to 180 (145) SEK – Hold


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