L'Oréal: analysts' forecasts

(CercleFinance.com) - RBC announced on Wednesday that it had upgraded its opinion on L'Oréal from "underperform" to "sector perform", with its target price raised from E340 to E410.


In a report, the broker explains that investor attention has recently focused on the ability of the major consumer staples groups to protect their earnings.

The analyst considers this approach to be a real "aberration", believing that it is growth in sales volumes that enables them to gain market share and generate cash.

From this point of view, he continues, L'Oréal has managed to maintain organic growth of around 5% over the last two years, despite sluggish demand, particularly in China, and a trend towards higher prices.

Conversely, the FMCG sector as a whole suffered a contraction in sales volumes last year, he points out.

While maintaining its "buy" recommendation on L'Oréal, Stifel has lowered its target price from E470 to E450, in the wake of a 1.5% reduction in its 2024-25 operating profit expectations for the cosmetics giant.

The broker is including weaker growth assumptions for luxury goods and North Asia, due to persistently low Chinese consumer confidence and deteriorating footfall in shopping centre there.

While acknowledging the weak market trends in China in the second quarter, Stifel believes that these can be largely priced in, with the share price down 10% over the past month.


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