Estee Lauder (NYSE: NYSE:EL) has experienced a revision in its financial outlook as Deutsche Bank adjusted the company's price target, bringing it down to $98 from the previous $105.
Despite this change, the firm has chosen to maintain its Hold rating on the stock.
The adjustment comes with a detailed analysis from the financial institution, citing a longer-than-anticipated recovery period as the primary reason for the revision.
The bank's analyst pointed out that while the full-year fiscal year 2025 (FY25) earnings per share (EPS) estimate of $2.95 remains consistent with the upper end of Estee Lauder's guidance range of $2.75 to $2.95, there has been a reduction in expectations for fiscal year 2026 and beyond. This includes anticipated figures for sales, gross margin, operating profit, and EPS.
In tandem with the lowered financial forecasts, the price target has been adjusted downwards to $98. This new target reflects the updated expectations and the belief that Estee Lauder's recovery may take longer than initially anticipated.
Despite the reduction in the price target, Deutsche Bank has decided to maintain its Hold rating on Estee Lauder's shares. This suggests that the firm advises investors to retain their positions in the stock at the current time without advocating for additional buying or selling.
In other recent news, Estée Lauder has announced significant leadership changes. Mark Loomis, Group President of North America, is set to retire at the end of fiscal year 2025, with Tara Simon and Amber English named as successors.
In the recent developments, Piper Sandler maintained an Overweight rating on Estée Lauder and increased the company's price target to $122.00, reflecting optimism about the company's near-term prospects, particularly considering recent economic stimulus measures in China.
DA Davidson sustained its Buy rating on Estée Lauder shares with a price target of $130.00, despite an earnings downturn in the first half of fiscal year 2024. Evercore ISI maintained its Outperform rating with a $130.00 price target for Estée Lauder, highlighting the company's recent performance in China's online market. The company's Profit Recovery and Growth Plan aims to deliver between $1.1 and $1.4 billion in net profit over fiscal year 2024 levels.
Additionally, Haider Ackermann has been appointed as the new Creative Director for TOM FORD, a part of Estée Lauder's portfolio. Piper Sandler also reiterated a positive outlook on e.l.f. Beauty (NYSE:ELF), maintaining an Overweight rating and a $150.00 price target for the company's stock after findings from its 48th semi-annual Teen Survey.
InvestingPro Insights
The recent adjustment in Estee Lauder's price target by Deutsche Bank aligns with several key insights from InvestingPro. The company's revenue growth has been sluggish, with a 1.9% decline in the last twelve months as of Q4 2024. This supports the analyst's view of a longer recovery period. However, Estee Lauder maintains impressive gross profit margins of 71.67%, which could provide a buffer during this challenging period.
InvestingPro Tips highlight that Estee Lauder "has maintained dividend payments for 29 consecutive years" and "has raised its dividend for 3 consecutive years." These factors may offer some reassurance to investors during the anticipated extended recovery phase. The current dividend yield stands at 2.96%, which could be attractive to income-focused investors.
It's worth noting that Estee Lauder is "trading at a high earnings multiple," with a P/E ratio of 81.5. This high valuation, combined with the stock taking "a big hit over the last six months" (a 38.67% decline), aligns with Deutsche Bank's cautious Hold rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Estee Lauder's financial health and market position.
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