The Zhitong Finance App learned that UBS released a research report stating that the rating of L'Occitane (00973) was downgraded from “buy” to “neutral”, and the target price was raised 17% from HK$26 to HK$30.6. The bank believes that the company's stock price has risen 62% since December last year, and the stock price fully reflects its positive factors and concerns.

The bank believes that the rise in L'Occitane's stock price was mainly driven by strong sales growth of the Sol de Janeiro (SDJ) brand and news in February that Blackstone Group was considering a takeover offer for the company. Despite the weak sales performance of L'Occitane's core brands in the first nine months of fiscal year 2024, SDJ's 3-digit sales growth momentum is enough to make up for it. UBS expects the company's compound annual growth rate (CAGR) for the 2024-2026 fiscal year to be 12%, which can reach its mid-term sales target. However, due to weak sales performance of core brands and increased marketing expenses, achieving mid-term operating margin targets remains challenging.