L’Oreal just received some help from Goldman’s Fulvio Cazzol, Millie Pierce, John Ennis and Natasha de la Grense. Per today’s report:
« We believe the L’Oreal share price fails to reflect its superior long-term growth prospects relative to other consumer staples bellwethers. On our analysis of self-help, L’Oreal screens as a “GAMA” (growth compounder with margin opportunity from self help) stock, offering superior organic growth as well as long-term margin upside. We believe near-term concerns over slowing growth in Luxury could prove overdone, as higher investment at a time when most competitors are cutting, could pave the way to further
share gains; we forecast organic revenue growth of 4.8% in 2018.
With FY18 Reuters consensus earnings growth at an undemanding +5.4%, and a balance sheet offering significant optionality (we forecast €1.6bn in net cash in FY17E), we see a good buying opportunity. We upgrade L’Oreal to Buy (from Neutral) with a 12M price target of €210 (from €195), offering 11% upside. »