Kering SA is Morgan Stanley's top European luxury goods pick

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Morgan Stanley upgraded Kering SA (OTCPK:PPRUF [https://seekingalpha.com/symbol/PPRUF]) to an Overweight rating on Tuesday after being on the sideline for eight years with the European luxury stock.

The firm thinks the Kering (OTCPK:PPRUF [https://seekingalpha.com/symbol/PPRUF]) story is starting to change, with several recent developments pointing to a more constructive outlook for the group. A major catalyst identified by the Morgan Stanley analysts team is the arrival of Luca de Meo as CEO in September 2025.

Before joining Kering (OTCPK:PPRUF [https://seekingalpha.com/symbol/PPRUF]), de Meo spent over three decades in the automotive industry, holding senior roles at Renault (OTCPK:RNSDF [https://seekingalpha.com/symbol/RNSDF]), Toyota (TM [https://seekingalpha.com/symbol/TM]), Fiat, and Volkswagen Group (OTCPK:VLKAF [https://seekingalpha.com/symbol/VLKAF]), and serving as CEO of Renault from 2020, where he built a strong reputation as a pragmatic and results-driven turnaround leader.

Although he comes from outside the luxury sector, de Meo is widely regarded as a disciplined operator with a sharp focus on execution, efficiency, and product strategy.

"We believe that recent management and strategic changes should lead to material profit upside over the next three years. For example, we now assume that Gucci's operating profit could reach €3,060m in 2028 (a 30.7% margin) from a trough of €982m in 2025 – still this would imply a cumulative decline of -22% from the 2019 peak," read part of Morgan Stanley's bullish assessment.

Investors are expected to look through the industry-leading valuation multiples on Kering (OTCPK:PPRUF [https://seekingalpha.com/symbol/PPRUF]) for the next 12 months and see the risk-reward profile skewed to the upside.

Kering (OTCPK:PPRUF [https://seekingalpha.com/symbol/PPRUF]) was named Morgan Stanley's top overall personal luxury goods sector pick.

MORE ON KERING SA

* Kering SA (PPRUY) Shareholder/Analyst Call Transcript [https://seekingalpha.com/article/4821017-kering-sa-ppruy-shareholder-analyst-call-transcript]
* Kering SA (PPRUY) Shareholder/Analyst Call - Slideshow [https://seekingalpha.com/article/4821826-kering-sa-ppruy-shareholder-analyst-call-slideshow]
* Kering: Luxury Bloodbath Continues [https://seekingalpha.com/article/4808311-kering-luxury-bloodbath-continues]
* Kering trades higher after delaying a potential full acquisition of Valentino [https://seekingalpha.com/news/4494025-kering-trades-higher-after-delaying-a-potential-full-acquisition-of-valentino]
* Seeking Alpha’s Quant Rating on Kering SA [https://seekingalpha.com/symbol/PPRUY/ratings/quant-ratings]