Puig Faces Downgrade from Bank of America Amid Fragrance Sector ‘Slowdown’

New cycle for perfumery. Bank of America has cut its recommendation on companies such as Puig and Interparfums, in view of its forecast of a change of cycle for the fragrance market, the strongest category within the beauty industry in the last three years.

As a consequence of a lower number of stocks by retailers, as well as the reduction of launches by manufacturers and the latest negative data on exports, the US investment bank foresees a slowdown in the perfume market, as reported by Cinco Días.

The announcement has led to a 0.8% drop in the Ibex 35 for Puig, which has already accumulated a 13% decline in September, as well as a price target reduction from €18 to €15 per share.

Bank of America considers “short-term risks too high” for Puig

Bank of America points in the report to a possible closing of cycle for the fragrance market, which has grown in the last three years up to 13% compound annual growth rate (CAGR), more than double that of the beauty market, and reaching a total of €62 billion.

The institution has considered that the “short-term risks are too high” for the Spanish company and points out that Puig’s revenues have slowed to a mid-single-digit rate, below the high-single-digit expected by the company in its IPO.

However, 71.4% of the analyst consensus compiled by Bloomberg highlight the buy recommendation, with a 12-month target price of €21.66, as opposed to the negative view of Bank of America.