L'Oreal (OREP.PA): Momentum set to continue in Q3 despite tougher comps; reiterate Buy

Goldman Sachs previews L'Oréal's Q3 results. We expect the momentum to continue in Q3 despite tougher comparatives: reported organic sales growth should be dampened by an IT phasing impact, while underlying organic growth remains stronger. Growth is expected to be led by Dermatological Beauty and Professional Products, with Consumer Products and L'Oréal Luxe growing more modestly. Regionally, L'Oréal should continue to outperform in China and the US (Nielsen data tends to understate reported growth), while Europe is slightly lagging the market although suncare and haircare perform well. China remains the one category within Staples where demand is robust, and share gains are driven by Luxe. We believe a return to mid-single-digit organic growth together with margin improvement could drive a re-rating, and the current valuation looks attractive relative to history; we reiterate our Buy rating.