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Investing.com -- Shares of cosmetics giant L’Oreal saw an increase of up to 2.3% as the company’s like-for-like sales growth surpassed expectations.
This boost was mainly attributed to a robust performance in the Chinese market, even as sales in the US decelerated. Analysts are hopeful that this could indicate the beginning of a cautious recovery.
The beauty company’s sales performance was better than investors had anticipated, according to Robert Ottenstein, an analyst at Evercore ISI. He noted that L’Oreal’s valuation is becoming attractive.
Both the Chinese and US markets showed growth, with China showing improvement. However, the US market experienced a significant slowdown.
Deutsche Bank (ETR:DBKGn), while maintaining a sell rating, reduced its price target for L’Oreal to €265 from €275. Analyst Tom Sykes noted that L’Oreal’s like-for-like growth was better than feared, considering the reports from peers and the tough comparison with the first quarter.
He suggested that the recovery would likely depend on a significant rebound in China, as he anticipates only a limited improvement outside of China. He also expects the fragrance business to slow down.
The increased demand for pricey perfume and makeup contributed to L’Oreal’s sales climb. The company’s performance in China has sparked optimism for a potential recovery, despite a marked slowdown in the US market.
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