Analyst David Hayes of Jefferies maintained a Sell rating on L’Oreal, retaining the price target of €340.00.
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David Hayes has given his Sell rating due to a combination of factors surrounding L’Oreal’s recent acquisition of Kering’s beauty operations. The transaction, valued at €4 billion, involves the Creed fragrance franchise and the future license for Gucci beauty, which will transfer in 2028. While the acquisition is expected to be slightly accretive, contributing approximately 1% to earnings, the overall financial impact appears limited given the scale of L’Oreal’s existing operations.
Furthermore, the current sales and EBITDA figures for Kering’s beauty assets, including Creed and the anticipated Gucci license, suggest that the acquisition may not significantly enhance L’Oreal’s growth trajectory. The estimated sales run rate of €800 million and EBITDA of €300 million, while substantial, may not justify the high acquisition cost in the context of L’Oreal’s broader business. These considerations likely influenced Hayes’s decision to issue a Sell rating, reflecting concerns over the strategic and financial merits of the deal.
Hayes covers the Consumer Defensive sector, focusing on stocks such as Nestlé SA, DANONE SA, and Unilever. According to TipRanks, Hayes has an average return of 1.2% and a 50.54% success rate on recommended stocks.
In another report released on October 9, Deutsche Bank also maintained a Sell rating on the stock with a €340.00 price target.