L’Oreal downgraded to Underperform from Hold at Jefferies

Jefferies downgraded L’Oreal (LRLCY) to Underperform from Hold with a price target of EUR 340, down from EUR 371. The current 29-times next-twelve-months earnings multiple demands mid-term organic sales growth of over 5% and a virtuous cycle for profitability, including expanding gross margins and leverage, but those dynamics feel unlikely now, the analyst tells investors in a research note. The beauty category is reverting to a well established historic structural growth norm of about 4% following the “unique China boom”, the firm added.