Analysts doubt L’Oréal’s ability to maintain Q1 performance
Is 5.8% sales increase sustainable?
French cosmetics sector analysts are uncertain as to whether L'Oréal's strong first quarter 2011 performance can be sustained through the year. The company reported a sales increase of 5.8% in organic terms following unexpectedly faster growth in the US market.
The Paris Bourse reacted sharply on the news, with L'Oréal stock rising 3.15% to €85.82, outperforming the CAC-40 index's rise of 2.14%.
Several analysts have now raised their forecasts for L'Oréal for the whole of 2011. Société Générale, for example, estimates organic growth this year at 6.5%. But Credit Suisse and Nomura are more cautious, believing that the first quarter performance is unlikely to be repeated in succeeding quarters. Their sales forecasts of around 5.2% and 5.3% assume the company will not in fact top the 2010 growth performance of 5.6%.