Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward – L'Oreal S.A (OREP.PA)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Like-for like/Organic Growth (%) 4.0 5.8 5.7 5.5

Operating Margin (%) 20.2 20.4 20.7 21.0

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Mid-single-digit, sustainable long-term organic RISKS TO UPSIDE FY Dec 2026e

growth Resilient consumer demand with limited

Gradual margin progression downtrading Sales / 47,075

M&A as a source of growth Strong pricing with limited volume impact Revenue 23,776 47,586

Bet IQ deployment with higher savings on A&P (€, mn) 45,692

GLOBAL REVENUE EXPOSURE Cash deployment in value-accretive M&A

Faster recovery in China consumption

APAC, ex Japan, Mainland 9,622 0-10% China and India RISKS TO DOWNSIDE EBIT 5,063 9,986

0-10% India Recessionary environment weakening demand (€, mn) 9,333

0-10% Japan for discretionary products

0-10% Latin America Increased competition in China

0-10% MEA Higher rate of innovation by competitors EPS 13.66

0-10% UK Weaker US consumption (€) 7.40 14.11

10-20% Mainland China Slowdown in key EMs 13.40

20-30% North America

30-40% Europe ex UK

OWNERSHIP POSITIONING ROE 20.9

Source: Morgan Stanley Research Estimate 18.8 24.5

(%)

View explanation of regional hierarchies here Inst. Owners, % Active 74.3% 20.5

HF Sector Long/Short Ratio 1x

MS ALPHA MODELS Mean Morgan Stanley Estimates HF Sector Net Exposure 0.2%

Source: Refinitiv, Morgan Stanley Research

4/5 3 Month Refinitiv; MSPB Content. Includes certain hedge fund

MOST Horizon exposures held with MSPB. Information may be

inconsistent with or may not reflect broader market

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is trends. Long/Short Ratio = Long Exposure / Short