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On Monday, Berenberg analyst Fulvio Cazzol adjusted the price target for Estee Lauder (NYSE:EL) shares to $61 from the previous target of $60, while maintaining a Hold rating on the stock. The company’s shares currently trade at $59.39, having fallen over 54% in the past year. According to InvestingPro data, analyst targets range from $56 to $120, with the stock currently appearing undervalued based on Fair Value analysis. The revision followed Estee Lauder’s publication of its third-quarter fiscal year 2025 results on May 1, which revealed a 9% year-over-year drop in group organic sales, aligning with the Visible Alpha consensus. Despite challenges, the company maintains impressive gross profit margins of 73.93% and has sustained dividend payments for 30 consecutive years, as highlighted in InvestingPro’s analysis.
The company’s performance across its key divisions showed varying levels of decline. Skin Care’s like-for-like (lfl) sales decreased by 11%, which was slightly better than the predicted 12.6% drop. Makeup sales saw a 7% decline, more than the 4.4% consensus had anticipated. Fragrance sales dipped by 1%, against a slight expected increase of 0.7%, while Hair Care sales fell by 10%, a steeper decline than the 2.2% consensus forecast.
Regionally, the Americas experienced a 5% decline in sales, which was more than the 0.6% consensus estimate. Asia-Pacific sales were down by 1%, faring better than the expected 9.8% decline. However, the Europe, Middle East, and Africa (EMEA) region, including travel retail, witnessed a significant 16% drop, which was more than the 14.6% predicted by the consensus.
Despite the declines in sales across various segments and regions, Estee Lauder’s financials exceeded expectations in other areas. The group’s adjusted operating income reached $403 million, which was a substantial 70% above the consensus estimate of $238 million. Additionally, earnings per share (EPS) came in at $0.65, more than double the forecasted $0.31, representing a 112% beat. For deeper insights into Estee Lauder’s financial health and future prospects, including 7 additional ProTips and comprehensive valuation metrics, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Estee Lauder Companies Inc. reported third-quarter fiscal year 2025 earnings that exceeded expectations, with earnings per share (EPS) of $0.65, significantly surpassing the forecasted $0.31. Revenue also came in above expectations at $3.55 billion, compared to the anticipated $3.52 billion. Despite the positive financial results, the company faces ongoing challenges, including a 9% decline in organic sales and a significant 28% drop in Travel Retail sales. Estee Lauder’s management remains optimistic about a return to sales growth in fiscal year 2026, contingent on tariff alleviation and improved consumer sentiment.
In terms of analyst actions, UBS raised its price target for Estee Lauder to $62 from $60, maintaining a neutral stance, while Citi increased its target to $60 from $55, also keeping a neutral rating. Conversely, Goldman Sachs lowered its price target to $67 from $70, yet maintained a neutral rating as well. Analysts have noted Estee Lauder’s market share gains in the United States, China, and Japan, but express concerns over limited visibility into operational sales growth improvement for fiscal year 2026, largely due to tariff-related challenges.
Estee Lauder is actively pursuing growth strategies, including expanding its presence on platforms like Amazon (NASDAQ:AMZN), TikTok Shop, and Shopee. The company is also focusing on accelerating innovation and increasing consumer-facing investments to drive new consumer acquisition. However, management has flagged potential headwinds for profitability and EPS in fiscal year 2026, stemming from tariff expenses and ongoing market volatility.
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