Jefferies Trims L’Oreal Target Amid Global Beauty Slowdown

L'Oreal S.A. (EPA: OR), the French cosmetics giant, found its price target revised downwards by Jefferies by €10 from the previous mark of €365 to €355, maintaining a Hold rating on the shares. This adjustment reflects a cautious stance in the face of a global beauty market slowdown, particularly in China and the U.S. markets.

L'Oreal's shares showed a modest decrease of 0.77% at €340.80. The cosmetics company, known for its expansive portfolio including brands like Lancôme and Maybelline New York, with the latest price positioning the company towards the lower end of its 52-week range of €316.30  and €461.85.

Despite the revised pricing target, L'Oreal holds firm with a market capitalisation of approximately €182.5 billion, a testament to its substantial presence in the consumer defensive sector. Financially, the company reports a trailing price-to-earnings (P/E) ratio of 28.36 and a more forward-looking P/E ratio of 22.51, which may point towards expectations of increased profitability in the future. L'Oreal also maintains a dividend rate of EUR 1.41 per share, yielding 0.02%, with a payout ratio of 54.37%.

Recent performance data reveals total revenues of EUR 42.73 billion and a substantial net income to common shareholders amounting to EUR 6.48 billion. Nonetheless, the lowered target price by Jefferies indicates a cautious near-term outlook, likely factoring in global economic trends and a softening beauty market.

L'Oreal's strong institutional backing is evident, with 0.045% of its shares held by institutions. With more than 2.67 billion shares outstanding and notable liquidity, with over 234 million shares in its float, L'Oreal continues to capture the attention of the investment community. Current analyst consensus places the mean target price at EUR 101.25.

Rooted in Clichy, France, L'Oreal stands as a leader in the household and personal products industry, with a rich history stretching back to its founding in 1909. The company covers an extensive range of beauty products and brands, serving customers through diverse channels from mass market retail to specialised boutiques.

While Jefferies' price target for L'Oreal reflects ongoing concerns about the slowdown in the global beauty industry, particularly in the second half of 2024, an observed sequential improvement from Q3 to Q4 offers some optimism. This suggests that the company and its investors might see the current market turbulence as temporary, with potential for recovery on the horizon.