L’Oréal: Solid Q1 but Stable Growth Fails to Justify Premium Valuation, Supporting Sell Rating

David Hayes, an analyst from Jefferies, maintained the Sell rating on L’Oreal. The associated price target remains the same with €326.00.

David Hayes has given his Sell rating due to a combination of factors tied mainly to valuation versus growth sustainability. While he acknowledges that L’Oréal delivered a solid first quarter with like-for-like sales growth clearly above both his and the market’s expectations, he notes that this level of outperformance comes as peers are generally struggling, making the print look particularly strong in relative terms.

However, Hayes highlights that the underlying two‑year growth trend has been stable rather than accelerating, and he expects reported growth to slow into the low‑4% range as comparisons normalize. In his view, such a growth profile does not sufficiently justify L’Oréal’s premium valuation above 25x earnings, so even with momentum in key regions like the U.S., China, and Europe, the risk‑reward looks unfavorable, leading him to maintain a Sell rating.