It’s taken LVMH nearly a year-and-a-half to regain its spot as Europe’s biggest stock from Novo Nordisk A/S.

The Danish drugmaker’s shares fell more than 4% on Friday after its blockbuster Ozempic and Wegovy became the latest drugs to be targeted under US legislation, giving Novo Nordisk a market capitalization equivalent to about $355 billion and taking it below the French luxury-goods maker for the first time since September 2023. LVMH was down 0.3%, giving it a market value of $357 billion.

LVMH shares slumped 13% last year with the sector struggling as consumers in China pared back their spending. Yet signs of green shoots have bolstered investor sentiment, with earnings updates from peers Richemont SA and Brunello Cucinelli SpA lifting expectations.

“Luxury demand has cycled through one of its worst years in the last decade, however, trends are progressively improving from third-quarter lows,” Bank of America’s Ashley Wallace said in a recent note, in which the analyst upgraded her recommendation on LVMH to buy.

A Goldman Sachs Group Inc. basket tracking the sector has rebounded more than 20% since mid-November as China’s stimulus measures raise hopes that the world’s second-biggest economy can regain momentum. Furthermore, President-elect Donald Trump’s preference for lower taxes and looser regulations could also boost demand for luxury goods in the US.

“After a challenging 2024, we think the luxury sector looks set to benefit from a small rebound in 2025 and that LVMH, as the sector proxy, is well positioned,” said Barclays Plc analyst Carole Madjo.

Analysts are also becoming more bullish on certain names. TD Cowen upgraded Richemont ahead of its earnings, Stifel recently hiked Hermès International SCA to buy on the Birkin bag-maker’s pricing power, and last month UBS Group AG also upgraded a number of names.

Novo Nordisk shares have fallen more than 40% since reaching a record high last June. The stock has been hurt by supply and drug pricing concerns, along with increasing competition for its blockbuster obesity and diabetes medicines. Disappointing trial results for its experimental drug CagriSema prompted a plunge in Novo shares in December, with the stock dropping more than 20% in just one day.

Nevertheless, eyes remain firmly on the upcoming earnings season, especially on any commentary on how demand is holding up in key regions, as well as on whether China’s stimulus has had any impact. LVMH is due to report full-year results on Jan. 28.