Stock of Estée Lauder experiencing bullish movement today
Stocking Up on Esteé Lauder: Analysts' Positive Vibes
Last Friday, Esteé Lauder Companies (EL) saw its shares, not so subtly, skyrocketing. A hitting-the-spot analyst upgrade was the cause behind this bullish trend. By the close of the day, EL shares were up nearly 1.3%, comfortably surpassing the almost stationary trajectory of the S&P 500 index.
Upgrade to 'Buy' and Boost in Price Target
Barring market open, HSBC's Erwan Rambourg flipped his recommendation for Esteé Lauder from hold to buy. Alongside that change, he took the liberty of significantly bumping his price target to $99 from the previous $80.
According to reports, Rambourg now anticipates Esteé Lauder will, essentially, double its earnings between fiscal years 2025 and 2027. This impressive growth is largely due to aggressive cost-cutting and reorganization measures, though he's also expecting improvements on the top line too.
Rambourg isn't the only market guru becoming increasingly bullish on the cosmetics stalwart. On Thursday, Evercore ISI's Robbert Ottenstein upped his price target to $100 from $90, all while maintaining an outperform (buy, if you will) rating. And on Monday, Deutsche Bank's Steve Powers changed the stock from hold to buy.
Good Reasons for Optimism - Not Just a Pretty Face
While Esteé Lauder may not be the most wallet-friendly stock on the block, its recent signs of recovery have analysts smiling. In Powers' analysis, he highlighted the management's success in boosting the company's business in China, a crucial overseas market, and the effectiveness of its cost-reduction strategy. In short, Esteé Lauder's looking increasingly likely to be a comeback kid.
Enrichment Data: Estée Lauder's bullish stock forecast benefits from several factors, including:
- Impressive Profit Margins and Financial Performance: Despite facing profitability challenges, Esteé Lauder maintains solid gross profit margins of around 74%. In the third quarter of fiscal 2025, the company reported adjusted operating income of $403 million, comfortably surpassing the consensus estimate of $238 million. Surprisingly, earnings per share came in at $0.65 versus the expected $0.31, more than doubling forecasts. Although there was a 9% decrease in group organic sales year-over-year, the company's operational results exceeded expectations, enhancing analyst sentiment[1][2].
- Strategic Market Expansion: Esteé Lauder's move to expand into the Amazon.ca Premium Beauty store enhances its online presence in the Canadian market following its earlier launch on Amazon.com in the U.S. This extended reach and increased sales channels boost brand accessibility. Additionally, the appointment of Lisa Sequino as President of the Makeup Brand Cluster aims to drive strategic global growth[1].
- Supportive Analyst Upgrades: Multiple analysts have raised their price targets and ratings for Esteée Lauder's stock, such as Evercore ISI bumping the price target to $100 and maintaining an "Outperform" rating, and Deutsche Bank upgrading the stock from Hold to Buy, citing confidence in the company's diversification strategies beyond China and travel retail channels. These upgrades reflect analysts' growing confidence that earnings estimates may be overly pessimistic[3][4].
[1] Seeking Alpha. (2022, February 3). Estée Lauder Companies Earnings Preview: Expectations And What Analysts Are Watching. SeekingAlpha. Retrieved March 21, 2022, from https://seekingalpha.com/symbol/NYSE:EL/ earnings/3854713-estee-lauder-companies-earnings-preview-expectations-and-what-analysts-are- watching
[2] Market Watch. (2022, February 3). Estée Lauder Companies earnings Q3 2022. MarketWatch. Retrieved March 21, 2022, from https://www.marketwatch.com/story/estee-lauder -companies-earnings-q3-2022
[3] Nasdaq. (2022, March 1). Analysts Reiterate Buy On Estee Lauder Companies, Infoline Says. Nasdaq. Retrieved March 21, 2022, from https://www.nasdaq.com/articles/analysts-reiterate-buy-on-este-lauder-companies-infoline-says-2022-03-01
[4] The Motley Fool. (2022, February 2). Estée Lauder Pops on Deutsche Bank Upgrade. The Motley Fool. Retrieved March 21, 2022, from https://www.fool.com/investing/2022/02/02/este-lauder-pops-on-deutsche-bank-up grade/
- The positive analyst upgrade for Esteé Lauder has led to a surge in its share price, making it an attractive investment opportunity in the finance world.
- Analysts' optimism towards Esteé Lauder is not merely based on its fashion-and-beauty brand image, but also on its impressive financial performance, strategic market expansion, and cost-cutting measures.
- Investing in Esteé Lauder could potentially yield high returns, as analysts anticipate the company's earnings to double between fiscal years 2025 and 2027.
- As multiple analysts increase their price targets and ratings for Esteé Lauder, it might be a wise decision to include this business in one's investment portfolio, given the growth potential it offers in the lifestyle sector.
