Jefferies upgrades L’Oreal to Hold as two-year growth accelerates

Jefferies upgraded L’Oreal to Hold from Underperform and raised its price target to €377 from €328, citing improving underlying two-year growth trends after first-half results. Analysts said second-quarter results beat expectations across nearly all divisions and regions, with gross margin helped by favorable mix and innovation funded by cost savings. They noted the beauty market has firmed to about 5% growth, with multinationals regaining ground in China. Jefferies said underlying two-year like-for-like growth has accelerated above 5%, making L’Oreal capable of about 5.5% delivery. At 27 times earnings, valuation broadly reflects expectations, with a justified premium.