** Morgan Stanley adjusts its luxury view to account for a "creative supply shock" it sees in the sector, upgrading Kering PRTP.PA and LVMH LVMH.PA to "overweight" and downgrading Prada 1913.HK and Hermes HRMS.PA to "equal-weight"
** MS says the new burst of creativity, along with a fashion pendulum swing towards maximalism, can create a situation where "supply could create its own demand"
** Kering is the broker's new top pick; it says "the story is changing" under new CEO Luca de Meo and praises promising creative debuts at the Gucci and Bottega Veneta brands
** For LVMH, it points to positive developments from new creative direction at Dior — where it says sentiment seems to have shifted "overnight" — as well as Celine and Fendi
** In contrast, it notes growth at Hermes is normalising from a low double-digit to a high single-digit percentage, while Prada's star brand Miu Miu faces risks from rising competition
** Shares of Kering and LVMH rise close to 2% in early trading in Paris
RATING AND PRICE TARGET CHANGES:
COMPANY | RATING | OLD RATING | PT | OLD PT |
LVMH | overweight | equal-weight | EUR 635 | EUR 515 |
Kering | overweight | equal-weight | EUR 370 | EUR 250 |
Hermes | equal-weight | overweight | EUR 2,420 | EUR 2,550 |
Prada | equal-weight | overweight | HK$ 53 | HK$ 60 |
(Reporting by Mateusz Rabiega)
((Mateusz.rabiega@thomsonreuters.com))