In a research note, the firm points out that the beauty giant reported organic growth of 6.7% for the first three months of the year, a level significantly higher than the average pace observed over the 2025 fiscal year, reflecting more robust momentum than anticipated.

The analyst highlights, however, a risk of a short-term slowdown in activity linked to geopolitical tensions, notably the conflict in Iran, which could affect consumption in certain emerging markets. This backdrop could lead to a softening of final demand (sell-out) and, consequently, a sequential reduction in shipments to distributors (sell-in), at a time when the latter are already carrying high inventory levels.

Against this background, Morgan Stanley expects organic growth of 4.1% for the second quarter, a sharp deceleration compared to the first quarter (7.6%). For the full year, however, its forecast is raised to 5.4%, up from 5.1% previously.

Finally, the analyst believes the group's valuation is 'fair' at current levels, considering that L'Oreal's premium relative to the consumer staples sector is now better justified by the solid growth displayed in the first quarter.