Hermès International is a way for investors to shield themselves from a short-term downturn in the luxury-goods sector, according to BNP Paribas Exane analysts, who upgraded the Birkin bag maker to outperform for the first time.

Against a tough industry backdrop, “Hermès should continue to deliver significantly above-average top-line growth for longer, thanks to the defensiveness and visibility of its business model,” analysts including Antoine Belge and Melania Grippo wrote in a note.

Luxury stocks including LVMH, Gucci owner Kering SA and Burberry Group Plc have slid this year on concern about fading demand, partly linked to China’s economic slowdown.

By contrast, Hermès has held steady as its leather-goods unit benefits from long waiting lists and price increases, according to Exane, which has had a neutral rating since 2018. The shares rose as much as 1.5 percent in early trading.

Exane also cut earnings estimates and price targets for most other luxury stocks under its coverage, noting the sector faces “short-term pain.”

Swatch Group AG was downgraded to underperform from neutral, sending the Swiss watchmaker’s shares down as much as 0.9 percent on Tuesday.

By Joe Easton

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Hermès Outshines Rivals With Big Sales Jump

Sales at the French luxury group grew to €3.7 billion ($4.02 billion), a 13 percent organic sales rise that strips out currency fluctuations.