In a research note published this morning, the U.S. bank notes that the cosmetics giant reported organic revenue growth of 6.7% for the first three months of the year, representing a 2.30 percentage point acceleration compared to the fourth quarter.

According to BofA, this performance places L'Oreal well ahead of its peers, whose average growth stood at 2.2% for the quarter. The firm emphasizes that such a gap is particularly impressive given the group's existing global leadership position in its market.

The 'lipstick effect' remains relevant

The bank points out that the improved results were driven by a recovery in Chinese operations, solid momentum in North America, and a robust performance across the South Asia, Pacific, Middle East, and Africa region, despite geopolitical tensions in the Middle East.

Europe, for its part, illustrates the persistence of the 'lipstick effect' phenomenon: consumers, faced with an uncertain economic backdrop, are nevertheless maintaining their discretionary spending in the beauty sector, BofA continues.

According to the firm, L'Oreal remains one of the few consumer goods companies to record consistent volume growth, thereby defying a generally gloomier global consumer environment.

Valuation deemed attractive

In the face of inflationary pressures, notably oil price volatility, BofA analysts believe L'Oreal possesses the necessary levers to mitigate impacts through its pricing power, product mix optimization, innovation, and operational efficiency gains.

From a market perspective, the stock is trading at a price-to-earnings (P/E) multiple of 26x, a level BofA considers 'attractive' on both an absolute and relative basis compared to historical and sector valuations.

Bolstered by these fundamentals, the stock is included in Bank of America's '25 Stocks for 2026' selection, confirming its status as a benchmark growth stock within the European consumer goods sector.