Wall Street Analyst Sees Estée Lauder Stock at $81: Is It a Buy?

Estée Lauder Companies Inc. (EL) has been a staple in the beauty industry for decades, but its stock has taken a hit recently, dropping 18.4% in the past three months. Despite the recent downturn, one Wall Street analyst sees a bright future for the company, setting a price target of $81 for EL stock. But is it a buy?

Linda Bolton Weiser of DA Davidson has a bullish outlook on Estée Lauder, with a price target of $81, representing a 7.88% increase from the current stock price. Her optimism is supported by the company's strong earnings growth and revenue projections. Estée Lauder is expected to report earnings per share (EPS) of $1.62 this year, up 49.88% from the previous year, and $2.77 next year, indicating a 71.34% increase. Revenue is projected to grow by 4.01% next year, reaching $15.88 billion.

Estée Lauder's recent restructuring efforts and cost-cutting measures also play a crucial role in the analyst's price target. The company has spent $366 million so far on a two-year restructuring plan, with total costs expected to reach $500 million to $700 million. These efforts aim to improve operational efficiency and profitability, which could drive shareholder value and support the analyst's bullish price target.

The analyst's view on the prestige beauty market and Estée Lauder's position within it is also a key factor in their price target. Estée Lauder's strong brand portfolio, including Estée Lauder, Clinique, and M·A·C, has maintained its appeal despite market challenges. The company's global reach, with operations in over 150 countries, and its ability to adapt to changing consumer preferences, as seen in its strong performance in the Skin Care category and Fragrance segment, further bolster the analyst's confidence in the company's future.



However, it's essential to consider the potential risks and challenges that could impact Estée Lauder's stock price and the analyst's target. The company faces challenges in Asia, including weak consumer sentiment in China and reduced sales in the Asia travel retail sector. Additionally, rising costs, particularly higher selling expenses and increased advertising costs, have put pressure on its profitability. Despite these challenges, Estée Lauder has seen strong organic sales growth in the Skin Care category and achieved significant share gains in prestige Skin Care in China. However, these risks and challenges could impact the analyst's target price of $81.

In conclusion, while Linda Bolton Weiser of DA Davidson has a bullish outlook on Estée Lauder, with a price target of $81, investors should consider the potential risks and challenges facing the company. Estée Lauder's strong earnings growth, revenue projections, and restructuring efforts are promising, but the company's performance in Asia and rising costs are factors to monitor closely. As always, it's essential to conduct thorough research and consider your investment goals and risk tolerance before making any investment decisions.