On Thursday, Telsey Advisory Group adjusted its price target for Estee Lauder (NYSE: NYSE:EL) shares, reducing it to $142 from the previous $155, while keeping a Market Perform rating on the stock. The revision follows Estee Lauder's release of its fiscal third-quarter results, which surpassed expectations due to strong performance in gross margin and SG&A ratio, alongside some sales improvement in the EMEA region.
The company's performance in EMEA was partly attributed to a favorable year-over-year comparison in Asia travel retail. Additionally, Estee Lauder benefited from a strategic shift of marketing expenses from the third to the fourth quarter. Despite a positive third quarter, the company's forecast for the fourth quarter was lower than anticipated.
Even after a $0.50 earnings per share beat in the third quarter, Estee Lauder only increased the high end of its full-year 2024 outlook by $0.01, falling short of consensus expectations.
The company anticipates the second half of the year to be a turning point in terms of organic sales growth and margin expansion. However, the tempered growth outlook for the full year 2024 suggests ongoing macroeconomic concerns. Consequently, Telsey has maintained its Market Perform rating but has lowered the price target to reflect these uncertainties.
The new price target is based on a 15.3 times multiple on Estee Lauder's two-year forward EBITDA estimate. This is slightly below the one-year beauty group average multiple of 15.5 times. The adjustment reflects the analyst's view of increased macroeconomic uncertainty impacting the company's top-line growth forecast.
InvestingPro Insights
In light of the recent adjustments to Estee Lauder's (NYSE: EL) price target by Telsey Advisory Group, examining the company through the lens of InvestingPro data and tips can provide additional context. Estee Lauder's market capitalization stands at $45.66 billion, which reflects its significant presence in the beauty industry. Despite the challenges, the company's gross profit margin remains robust at 70.72%, underscoring its ability to maintain profitability in a competitive market. However, investors should note the stock's recent performance, with a one-week total return of -12.15% and a one-month total return of -16.63%, indicating recent market pressures.
Two InvestingPro Tips that are particularly relevant to Estee Lauder at this juncture include the impressive gross profit margins, which align with the fiscal third-quarter results, and the fact that the stock has taken a big hit over the last week, reflecting the market's reaction to the company's tempered growth outlook. These insights suggest that while Estee Lauder is navigating through macroeconomic uncertainties with a degree of resilience, reflected in its strong profit margins, the market is responding cautiously to its near-term prospects.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that could further inform investment decisions regarding Estee Lauder. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a comprehensive set of tools and insights on InvestingPro. There are 13 more InvestingPro Tips available for Estee Lauder, which could be invaluable for those looking to understand the company's investment potential from various angles.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.