L’Oréal Earnings: Derma Skincare Shines, but Growth Hampered by Weak Travel Retail and China Demand

We don’t plan any material changes to our EUR 388 fair value estimate after absorbing wide-moat beauty maker L’Oréal’s 2023 results that slightly missed our forecasts. We think L’Oréal remains well positioned in both premium and mass beauty for the long term thanks to a strong brand portfolio and tight channel partnerships globally. In particular, we expect its derma skincare and high-end fragrances to continue fueling sales expansion thanks to strong product efficacy and expanding distribution. We are maintaining our 10-year projections for high-single-digit sales CAGR and a 20% average operating margin. Shares remain overvalued after an 8% fall on the report.