Barclays has revised the investment rating of L’Oreal SA, lifting it from Underweight to Overweight. The London-based financial institution also increased the price target dramatically from EUR325.00 to EUR435.00, signaling stronger confidence in the cosmetics conglomerate’s prospects. Currently, L’Oreal, which holds a market capitalization of approximately $243.7 billion, is trading with a price-to-earnings ratio of 34, marginally exceeding its InvestingPro Fair Value estimate. The company enjoys a robust overall financial health grade rated as "GREAT."
In explaining the upgrade, Barclays emphasized the improving dynamics within the worldwide cosmetics sector. Although annual growth hovered below 3 to 3.5 percent throughout most of 2025, the industry's expansion accelerated to close to 4 percent in the fourth quarter. Amid this backdrop, L’Oreal reported revenues of $51.6 billion over the past twelve months, representing a growth rate of 2.6 percent.
The bank expressed a more optimistic outlook for L’Oreal as it heads into 2026, encouraged by signals of stronger growth particularly in the U.S. market and, to a somewhat lesser degree, in China. Barclays anticipates that the beauty sector could thus achieve growth rates in the range of 4 to 4.5 percent in the coming year. Supporting L’Oreal’s prominent market position are its healthy gross profit margins, which InvestingPro data places at an impressive 74.1 percent—a clear indicator of operational strength within the Personal Care Products industry.
Despite these positive indicators, Barclays highlighted ongoing competitive pressures from a growing presence of independent beauty brands. These challengers continue to erode market share, a trend Barclays does not expect to abate in the near term. Nonetheless, the research firm applauded L’Oreal’s "Beauty Stimulus" initiative, designed to drive stronger performance in the latter half of 2025. This program appears to have bolstered the company’s growth momentum, and Barclays views the overall setup for 2026 as attractive, albeit with some remaining uncertainties.
Parallel to Barclays’ assessment, UBS has also refreshed its view on L’Oreal, upgrading the company’s stock rating from Neutral to Buy. The Swiss investment bank raised its price target from EUR367.00 to EUR430.00, citing what it describes as "a rare combination of favorable factors" that materially strengthen L’Oreal’s investment case. Notably, this upgrade from UBS marks the first positive shift for the French cosmetics giant in over two years, reflecting growing confidence in its future potential. While UBS did not disclose specific factors underpinning its revision, this change aligns with a broader movement toward increased optimism among market watchers regarding L’Oreal’s trajectory.
In summary, the two major financial institutions have raised expectations for L’Oreal citing improving industry growth and strong company fundamentals. These upgrades come amid a cosmetics market that appears to be rebounding, with promising signs in key geographies such as the United States and China. L’Oreal’s powerful margin profile and strategic initiatives like the Beauty Stimulus plan have helped position it favorably, though competition from indie brands remains a notable challenge.