On Wednesday, Barclays (LON:BARC) initiated coverage on shares of Puig Brands SA (PUIG:SM), a company primarily known for its fragrances, assigning an Overweight rating and setting a price target of €24.40. The new coverage focuses on Puig's significant presence in the fragrance sector, which accounts for approximately 67% of its sales, positioning it as a prominent player in the growing prestige beauty market.
Puig Brands owns three of the top fifteen global prestige fragrances, ranking as the fourth player worldwide based on market share. The Barclays analyst highlighted the company's alignment with robust industry trends within Prestige Beauty.
Despite expectations for the fragrance category to experience a slowdown from its current double-digit growth to around 4% by 2026, the analyst anticipates Puig's portfolio will continue to outperform, with projected like-for-like (LFL) growth of approximately 5%.
The company's valuation was addressed, with the analyst's analysis suggesting that even if the fragrance category's growth decelerates, Puig would still achieve a 16x multiple on its 2025 earnings estimates. This represents an 11% discount to its current valuation. The report also notes Puig's strategic diversification into make-up and skincare, which is expected to contribute to the company's growth and balance its portfolio mix.
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