BofA Reaffirms L'Oréal's Buy Rating After Galderma Stake Boost

10:02 AM EST, 12/09/2025 (MT Newswires) -- BofA Global Research on Monday reiterated L'Oréal's (OR.PA) buy rating and price target of 440 euros following the French cosmetics and personal care products company's 10% stake increase in Galderma Group (GALD.SW). L'Oréal's stake in the Swiss dermatology company will stand at 20% upon deal completion, with analysts noting the possibility of a re-rating for L'Oréal on expectations of organic revenue growth and margin expansion picking up. "L'Oréal will pay 8x EV/sales for the most recent 10% tranche in Galderma, up from 3.6x in 2024, and above 4.5-5.2x for recent beauty transactions reflecting Galderma's unique positioning in injectable aesthetics. Assuming a 3.375% financing cost, in line with L'Oréal's most recent debt financing the transaction should be 0.5% accretive in 2026," the research firm said. "However, given Galderma is growing significantly faster than L'Oréal this should add 70bps to annual EPS CAGR in 2026-29E." EPS forecasts for 2025 and 2026 were nudged higher to 12.93 euros and 13.64 euros, respectively, from 12.92 euros and 13.54 euros, while the estimate for 2027 was bumped up to 14.95 euros from 14.76 euros. BofA also highlighted the importance of bolt-on acquisitions to L'Oréal's equity story and that its leverage ratio remains at a "conservative" range of 1.0-1.1x, anticipating the company to carry out additional M&A deals in the future.