L’Oréal: Near-Term Strength Masks Slowing Growth and Valuation De-Rating Risk

L’Oreal, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst David Hayes from Jefferies maintained a Sell rating on the stock and has a €337.00 price target.

David Hayes has given his Sell rating due to a combination of factors that, in his view, undermine the sustainability of L’Oréal’s current valuation. He expects the company to report stronger-than-consensus like-for-like sales growth in the upcoming quarter, reflecting solid execution in attractive categories. However, he sees this as a near-term high point rather than the start of a sustained acceleration in underlying momentum.

Looking beyond the upcoming results, Hayes forecasts that L’Oréal’s organic sales growth will ease to around the mid‑single‑digit range through 2026. While this level of growth remains healthy relative to peers, he argues it does not justify the shares trading at roughly 28x next‑twelve‑month earnings. As the market increasingly recognizes a more moderate growth trajectory, he anticipates a gradual de-rating toward a lower earnings multiple, closer to 23x, which implies downside risk from the current share price and supports his Sell recommendation.