Based in New York, The Estée Lauder Companies Inc. (EL) designs, markets, and sells a range of skincare, makeup, fragrance, and hair care products. Valued at a market capitalization of $22.9 billion, its offerings are available through department stores, mass retailers, company-owned outlets, hair salons, and travel retail locations.
Shares of this beauty company have substantially underperformed the broader market over the past year. EL has declined 49.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.4%. In 2024 alone, EL stock is down 56.4%, while the SPX is up 23.1% on a YTD basis.
Narrowing the focus, EL’s underperformance is also apparent compared to the Consumer Staples Select Sector SPDR Fund (XLP). The exchange-traded fund has gained 13.5% over the past year. The ETF’s 11% returns on a YTD basis outshine the stock’s double-digit losses over the same time frame.
On Nov. 6, Estée Lauder shares were among the biggest decliners, dropping more than 3%, despite a broader market rally following former President Trump's victory. The cosmetics company has faced challenges, particularly in China, and concerns over a potential U.S.-China trade war drove today's sell-off. Trump's campaign rhetoric on tariffs raised fears of profit impacts for global companies like Estée Lauder.
For the current fiscal year, which ends in June 2025, analysts expect EL’s EPS to decline 38.6% to $1.59 on a diluted basis. On the bright side, the company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 26 analysts covering EL stock, the consensus rating is a “Hold,” a step down from “Moderate Buy” a month ago. The current consensus is based on four “Strong Buy” ratings, one “Moderate Buy,” and 23 “Holds.”
This configuration is less bullish than a month ago, with eight suggesting a “Strong Buy.”
On November 4, B. Riley Financial, Inc. (RILY) analyst Anna Glaessgen reduced the price target for Estée Lauder to $70 from $95, maintaining a “Neutral” rating. The downgrade reflects concerns over market deceleration, limited visibility into domestic market share stabilization, and leadership transitions. The firm anticipates that the stock will remain rangebound in the near term due to increased uncertainty.
The mean price target of $81.64 represents a 28.1% premium to EL’s current price levels. The Street-high price target of $117 suggests an ambitious upside potential of 83.5%.
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