UBS: Top luxury stocks to watch during the Q1 earnings season

Investing.com – UBS has identified its top stock picks in Europe’s luxury goods sector ahead of the first-quarter earnings season, led by Richemont Group and Burberry, as geopolitical uncertainty weighs on valuations.

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The luxury sector has experienced a significant valuation reset; its valuation relative to the broader market is currently about 15 percentage points below the long-term average.

This decline reflects increased global uncertainty, causing serious investor anxiety—especially among those expecting luxury demand to recover this year. However, UBS noted that there is no evidence yet of demand slowing, particularly in Asia. The bank forecasts an average organic sales growth of 4% in the first quarter, broadly in line with market expectations.

This indicates a mild quarter-over-quarter slowdown compared to the 5% growth rate in Q4 2025, mainly due to the negative impact of the Middle East conflict, which is expected to create approximately a 1 percentage point sales headwind.

1. Richemont Group (CFR) - UBS maintains a Buy rating on Richemont Group and remains highly confident ahead of the first-quarter results announcement. The company expects that better-than-expected sales and earnings will highlight its unique equity story at a more attractive valuation level. This Swiss luxury group, along with LVMH, has been named a top stock pick.

2. Burberry (BRBY) - The UK luxury brand also received a Buy rating and high confidence from UBS. The bank expects sales and earnings to surpass expectations, and following the recent valuation reset in the sector, Burberry’s individual stock story should stand out at a more attractive valuation.

3. LVMH Group (MC) - UBS holds a constructive view on LVMH, giving it a Buy rating and listing it as a top stock pick alongside Richemont. However, the company warned that if growth does not exceed expectations, investors’ near-term patience may be limited.

UBS pointed out that this sector (excluding one company) is currently trading at an estimated premium of about 45% over the MSCI Europe Index—below the 70% average over the past five years and the 60% average over the past 15 years. In the context of negative market sentiment and depressed valuations, the firm believes that even moderate outperformance in the first quarter could generate disproportionate returns.

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