Barclays has reaffirmed its 'Overweight' recommendation on L'Oréal, with its price target raised from 453 to 467 euros, in light of the annual results published at the end of last week by the world's number one cosmetics company.
'Many investors seem to have been keen to buy L'Oréal on a pullback. With the share closing down 8% on Friday and expectations rebased for the first half of 2024, this looks like such an opportunity', the broker judges.
According to Barclays, its 2025 PE of 30x, for organic sales growth of 7% or more and EPS growth of 10% or more, 'looks reasonable'. Maintaining L'Oréal's multiple would result in an annual TSR of 12%", he continued.
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L'Oréal is the world leading cosmetic group. The group offers skincare products (39.9% of sales), makeup products (19.7%), haircare products (15.4%), fragrances (12.6%), hair colouring products (8.3%) and other (4,1%). Net sales break down by family of products as follows:
- consumer cosmetics (36.9%): L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie Niely, Dark and Lovely, Mixa, MG and Carol's Daughter brands;
- luxury cosmetics (36.2%): Lancôme, Kiehl's, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Biotherm, Helena Rubinstein, Shu Uemura, IT Cosmetics, Urban Decay, Ralph Lauren, Mugler, Viktor&Rolf, Valentino, Azzaro, Prada, Takami, A?sop, etc.;
- active cosmetics (15,6%): La Roche-Posay, Vichy, CeraVe, SkinCeuticals, Skinbetter Science, etc.;
- professional products (11,3%): L'Oréal Professionnel, Kérastase, Redken, Matrix and PureOlogy brands.
Products are marketed through mass distribution and distance selling, selective distribution, hair salons and pharmacies.
At the end of 2023, L'Oréal has 37 production sites worldwide.
Net sales are distributed geographically as follows: Europe (31.6%), North America (27%), North Asia (25.9%), Asia/Pacific/Middle East/Africa (8.4%) and Latin America (7.1%).