L'Oréal retreats as Jefferies warns of potential de-rating
L'Oréal is posting one of the sharpest declines on the CAC 40 index on Thursday morning after Jefferies lowered its price target on the stock. The broker expressed concerns over a compression of valuation multiples as growth normalizes for the world's leading cosmetics group.
As of 9:50 AM, the stock is down 1.5% at 361.1 euros, compared to a 0.7% dip for the CAC 40 at the same time.
In a research note published overnight, Jefferies stated it expects the robust sector data compiled by Nielsen for the first quarter—which shows L'Oréal outperforming its main rivals in both Europe and North America—to be reflected in the group's first-quarter revenue.
De-rating risk amid decelerating growth
The U.S. broker expects like-for-like sales growth of 3.7% for the period, but anticipates average organic growth of 4.1% over the next two years. While in line with 2025 estimates, this figure remains below the company's historical performance levels.
This slowdown risks triggering a de-rating of the stock, Jefferies warns. The firm fears the forward P/E ratio could revert to around 22x, down from 26x currently, prompting it to slash its price target from 350 to 326 euros.
The broker maintains its "Underperform" rating on the stock.
L'Oréal is scheduled to report its first-quarter revenue on April 22 after the market close.
L'Oréal is the world leading cosmetic group. The group offers skincare products (37.2% of net sales), makeup products (19.1%), haircare products (17.5%), fragrances (14.6%), hair colouring products (7.6%) and other (4%). Net sales break down by family of products as follows:
- consumer cosmetics (36.5%): L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie Niely, Dark and Lovely, Mixa, MG and Carol's Daughter brands;
- luxury cosmetics (35.4%): 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 (16.4%): La Roche-Posay, Vichy, CeraVe, SkinCeuticals, Skinbetter Science, etc.;
- professional products (11.7%): 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 2025, L'Oréal has 37 production sites worldwide.
Net sales are distributed geographically as follows: France (7.3%), Europe (26.5%), North America (26.6%), North Asia (22.9%), Asia/Pacific/Middle East/Africa (9.3%) and Latin America (7.4%).
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