Investing.com -- Luxury goods group Compagnie Financière Richemont (SIX:CFR) has been upgraded to a "buy" rating by analysts at TD Cowen, citing strong prospects for its jewelry division, particularly brands like Cartier and Van Cleef & Arpels.
As per analysts TD Cowen, Richemont’s jewelry division, which accounts for the majority of its sales, is well-positioned to benefit from shifting consumer preferences and robust demand for high-end non-bridal jewelry.
Analysts expect jewelry sales to surpass growth in other luxury categories, including handbags, driven by a compelling value proposition and evolving tastes, TD Cowen also raised its price target for Richemont to CHF 163 from CHF 130.
TD Cowen forecasts a 7% sales growth for Richemont in fiscal year 2026, compared to 4% for rival LVMH (EPA:LVMH).
The note flags Cartier and Van Cleef & Arpels as key contributors to Richemont’s success.
Both brands are expected to capture additional market share, driven by their strong heritage, innovative blend of classic and contemporary designs, and high levels of customer loyalty.
Jewelry now accounts for roughly 20-30% of the total luxury market, a share that TD Cowen forecasts will grow as consumers increasingly favor more timeless and investment-worthy pieces.
Analysts also pointed to Richemont’s ability to capitalize on the ongoing shift away from soft luxury items like handbags, which have seen pricing pressures and slowed growth.
In contrast, jewelry offers better value retention and continues to attract affluent buyers. The company’s pricing strategy, with bracelets and rings priced lower than high-end handbags, adds to its competitive edge.
TD Cowen also noted Richemont’s efforts to strengthen its portfolio, citing the recent acquisition of a jewelry watchmaker as a strategic move to enhance growth.
Additionally, the company is poised to benefit from continued demand in key markets, including the U.S. and parts of Asia, despite economic uncertainties.
Going forward, TD Cowen has revised its earnings per share forecast for Richemont, now projecting a rise to €7.00 for fiscal year 2026, compared to the prior estimate of €5.95.
This reflects a 20% year-on-year growth, beating the overall performance of the broader luxury market.