L'ORÉAL : RBC raises its opinion, target 410 euros
July 03, 2024 at 09:19 am
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RBC announced on Wednesday that it had upgraded its opinion on L'Oréal shares from "underperform" to "perform in line with the sector", with a price target raised from 340 to 410 euros.
In a research note, the research firm explains that investor attention has recently focused on the ability of major consumer staples groups to protect their earnings.
The analyst considers this approach to be a real "aberration", believing that it is growth in sales volumes that enables them to gain market share and generate cash.
From this point of view, he continues, L'Oréal has managed to maintain organic growth of around 5% over the last two years, despite sluggish demand, particularly in China, and a trend towards higher prices.
Conversely, the FMCG sector as a whole suffered a contraction in sales volumes last year, he points out.
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L'Oréal is the world leading cosmetic group. The group offers skincare products (39.9% of sales), makeup products (19.7%), haircare products (15.4%), fragrances (12.6%), hair colouring products (8.3%) and other (4,1%). Net sales break down by family of products as follows:
- consumer cosmetics (36.9%): L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie Niely, Dark and Lovely, Mixa, MG and Carol's Daughter brands;
- luxury cosmetics (36.2%): Lancôme, Kiehl's, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Biotherm, Helena Rubinstein, Shu Uemura, IT Cosmetics, Urban Decay, Ralph Lauren, Mugler, Viktor&Rolf, Valentino, Azzaro, Prada, Takami, A?sop, etc.;
- active cosmetics (15,6%): La Roche-Posay, Vichy, CeraVe, SkinCeuticals, Skinbetter Science, etc.;
- professional products (11,3%): L'Oréal Professionnel, Kérastase, Redken, Matrix and PureOlogy brands.
Products are marketed through mass distribution and distance selling, selective distribution, hair salons and pharmacies.
At the end of 2023, L'Oréal has 37 production sites worldwide.
Net sales are distributed geographically as follows: Europe (31.6%), North America (27%), North Asia (25.9%), Asia/Pacific/Middle East/Africa (8.4%) and Latin America (7.1%).