Berenberg says beauty market 'tougher to grow' in 2025, Beiersdorf remains 'top pick'

Berenberg expects the global beauty market growth to slow in 2025, seeing headwinds from China to continue to weigh on prestige skincare and expecting mass beauty categories to generate modest growth, driven by lower industry pricing

In 2025, the broker expects the global beauty market to grow 3.7%, well below the four-year average of 6.9% and sees growth moderating in North America and Europe from mid-to high-single-digit levels in 2024 to 3.3% in 2025

It anticipates the global beauty market will return to its historical 4.5% average annual growth rate in 2026

Berenberg says Beiersdorf BEIG.DE, L'Oreal OREP.PA, Galderma GALD.S, Coty COTY.N and Unilever ULVR.L are its top performers in the beauty market for 2025, and views them as better positioned, more agile and possessing the greatest managerial and operational strength

The brokerage starts coverage of Rabanne owner Puig PUIGb.MC with 'hold' with the co's operational flexibility seen as a risk, and starts Coty with 'buy', considering the upcoming investor day on June 18 as a key catalyst for the stock

It also cuts L'Oreal to 'hold' from 'buy', as it believes the global beauty market backdrop tilts risks to the downside for the company

Beiersdorf remains the broker's 'top pick'; Berenberg considers the co's ability to outperform its industry through its strong pipeline of breakthrough products and geographic expansion to be underappreciated