eyeQ: hope that new boss will trigger this stock’s recovery
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. This time it analyses a wealthy fallen giant.
17th June 2025 11:29
by Huw Roberts from eyeQ
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Kering
Macro Relevance: 64%
Model Value: €175.21
Fair Value Gap: +8.65% premiumto model value
Data correct as at 17 June 2025. Please click glossary for explanation of terms. Long-term strategic model.
In recent years, one of the few challengers to artificial intelligence (AI) as the top investment theme was luxury goods. Companies such as Lvmh Moet Hennessy Louis Vuitton SE (EURONEXT:MC), Hermes International SA (EURONEXT:RMS) and Kering SA (EURONEXT:KER) dominate the space, accounting for two-thirds of global sales.
The story is pretty robust; these stocks have huge brands, decent “moats” (i.e. high barriers to entry from new competition) and strong pricing power that helps retain margins, while demographic trends point to a growing middle class globally, but especially in China.
The story had a great run before Covid, enjoyed further success in 2021 as stay-at-home shoppers splashed out on luxury items. But has suffered in recent years among fears around a global recession.
Today, there's some significant company news from Kering, which owns a host of big-name brands including Gucci.
Luca de Meo was named as the new CEO and the hope is that he can reproduce the success he had at turning Renault around. That news has prompted a sharp rally this morning.
Bottom-up analysts will know more about de Meo's pedigree and likely success at revitalising things. From eyeQ's macro perspective, there are a couple of interesting observations:
- a macro relevance score of 64% shows the stock is entering a new macro regime for the first time in just over a year
- macro-warranted model value remains subdued. The good news is that it's not falling, but rather treading water, awaiting a fresh catalyst to spark new momentum
- that means this latest rally has taken Kering 8.65% rich to where our model says it “should” be trading. That's not enough to trigger a bearish signal, but it does suggest a fair amount of good news is already priced in
- For that to happen, it needs European reflation (rising growth/inflation), a weaker euro and healthy risk appetite.
The point being that there will be upbeat articles about Kering around today and tomorrow. There are strong arguments for luxury as an attractive investment theme, and the stock price has fallen all the way back to levels we haven't seen since January 2017.
So, the next move is more likely a buy than a sell. But, on eyeQ's metrics, these aren't the optimal entry levels just yet.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
These third-party research articles are provided by eyeQ (Quant Insight). interactive investor does not make any representation as to the completeness, accuracy or timeliness of the information provided, nor do we accept any liability for any losses, costs, liabilities or expenses that may arise directly or indirectly from your use of, or reliance on, the information (except where we have acted negligently, fraudulently or in wilful default in relation to the production or distribution of the information).
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Equity research is provided for information purposes only. Neither eyeQ (Quant Insight) nor interactive investor have considered your personal circumstances, and the information provided should not be considered a personal recommendation. If you are in any doubt as to the action you should take, please consult an authorised financial adviser.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.