Hold Rating on Estée Lauder Amid Sales Decline and Uncertain Recovery Prospects

The Estée Lauder Companies (EL – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Cheria Widjaja from DBS maintained a Hold rating on the stock and has a $73.00 price target.

Cheria Widjaja has given his Hold rating due to a combination of factors affecting The Estée Lauder Companies. The company’s recent financial performance revealed a net loss per share, influenced by restructuring charges and a decline in organic sales. This downturn is largely attributed to significant drops in sales in Mainland China and the global travel retail sector, particularly in Asia. The fiscal 2025 outlook has been withdrawn amidst ongoing macroeconomic uncertainties, emphasizing the difficult sales environment in these regions.
Despite The Estée Lauder Companies’ efforts to turn around its financial performance through its Profit Recovery and Growth Plan (PRGP) and other strategic initiatives, the anticipated near-term sales declines in key markets pose challenges. These initiatives include enhancing their innovation pipeline, digital capabilities, and distribution channels. However, the company’s ability to recover and achieve long-term growth is still uncertain, leading to a Hold rating. The target price of USD73 reflects these uncertainties, factoring in a slower recovery outlook and aligning with its global beauty peers, while emphasizing the need for more concrete signs of improvement before revising the rating upwards.

According to TipRanks, Widjaja is a 3-star analyst with an average return of 11.0% and a 100.00% success rate. Widjaja covers the Consumer Defensive sector, focusing on stocks such as Colgate-Palmolive, Kimberly Clark, and Procter & Gamble.

In another report released yesterday, Stifel Nicolaus also maintained a Hold rating on the stock with a $77.00 price target.