Puig Faces Market Hit: JPMorgan Lowers Rating on Sector Cooldown

Puig, in low hours in the stock market. JPMorgan has issued the first negative recommendation on the perfumery company after halving its target price from €25 to €12.5 due to the slowdown in the fragrance market. This has triggered a drop in its shares, which have slowed by 6% this Thursday.

The investment bank argues that the Spanish company is in a vulnerable situation in the fragrance sector, as fragrances account for 72% of revenues and 86% of Ebit in fiscal 2025 estimates, which makes the company significantly exposed to changes in the sector.

JPMorgan has also reduced its estimates for adjusted EPS, i.e., the amount of dividends the company will be able to afford to pay its shareholders. It has done so by about 2% for 2025 and up to 12% for next year, taking into account a slower revenue growth forecast in the fragrance category.

Investment bank warns of a cycle change in the perfumery market

The investment bank noted that Puig will be in a position to outperform the declining beauty market, given its earnings history and market share. However, this is the lowest valuation issued by all research firms covering the stock.

JPMorgan joins Bank of America, which already cut its recommendation on Puig at the end of September as the fragrance market, the strongest category within the beauty industry in the last three years , is expected to turn around.

At the time, the investment bank cited reduced launches by manufacturers and negative export data, as well as lower retailer inventories, as responsible for a future slowdown in the perfume market.

Puig posted sales of €2.299 billion in the first half of the year, up 5.9% on 2024. On a like-for-like basis, all segments were up: fragrances and fashion were up 8.6%, skin care was up 8.6% and make-up was up 2%.

Adjusted net profit amounted to €247 million, 3.9% more than in the same period of the previous year. Adjusted gross operating profit (ebitda) was €445 million, up 8.6%, with a margin of 19.4%. The operating income reached €332.3 million, up 6.2%, while the group’s net debt fell to €1.42 billion.