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Investing.com - JPMorgan downgraded LG Household & Health Care Ltd (KS:051900) (OTC:LGHHF) from Neutral to Underweight and slashed its price target to KRW220,000 from KRW320,000, implying 30% downside potential.
The downgrade follows LG Household & Health Care’s second-quarter 2025 operating profit of KRW55 billion, significantly below JPMorgan’s estimate of KRW141 billion. The Beauty business segment reported a loss during the quarter.
LG Household & Health Care indicated this quarter marks the beginning of restructuring efforts, primarily in domestic duty-free shops and traditional channels. The company also reduced its earnings outlook for the remainder of the year.
China sales declined 11% year-over-year, with the company facing high base effects from strong performance in the previous year. JPMorgan expects continued losses in the Beauty business during the second half of 2025 due to further sales contraction in duty-free shops and China, higher raw material costs, and marketing investments in China and Western markets.
The company announced the cancellation of 315,000 treasury shares but indicated additional near-term share buybacks are unlikely given capital needs for mergers and acquisitions and marketing investments. JPMorgan cut its 2025 and 2026 operating profit estimates by 34% and 36% respectively following the earnings results.
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