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Investing.com - Deutsche Bank (ETR:DBKGn) upgraded Estee Lauder (NYSE:EL) from Hold to Buy on Monday, while raising its price target to $95.00 from $71.00. The stock, currently trading at $75.19, has shown strong momentum with a notable recovery from its 52-week low of $48.37. According to InvestingPro data, the company maintains impressive gross profit margins of 74%.
The upgrade reflects Deutsche Bank’s increasing confidence that Estee Lauder’s strategy is successfully diversifying beyond China and related travel retail channels for future growth. The firm noted the company is accelerating innovation across brands and price tiers while migrating decision-making geographically closer to where business operations occur. Despite recent revenue decline of 3.65%, InvestingPro analysis shows the company maintains strong financial health with liquid assets exceeding short-term obligations.
Deutsche Bank believes Estee Lauder has largely fulfilled its heavy investment requirements, particularly related to supply-chain enhancements and forecasting capabilities. This completion of major infrastructure investments positions the company to better leverage future top-line growth.
The firm expects these completed investments will benefit margin and profit recovery, with any new commercial or capability investments funded by eliminating areas of historical cost overrun.
The price target increase represents a significant 33.8% upside from Estee Lauder’s previous target, signaling Deutsche Bank’s strengthened outlook on the company’s strategic direction and financial prospects.
In other recent news, Estée Lauder has launched its products on the Amazon (NASDAQ:AMZN).ca Premium Beauty store, expanding its online presence in Canada. This move allows Canadian customers to access popular Estée Lauder products like the Advanced Night Repair Serum and Double Wear Stay-In-Place foundation through Amazon’s platform. Meanwhile, Moody’s has downgraded Estée Lauder’s ratings from A2 to A3 due to slower-than-expected recovery in the Asia travel retail market and other economic challenges. The company faces a negative outlook, with Moody’s citing uncertainties in profit improvements and high debt-to-EBITDA leverage.
Additionally, Estée Lauder has appointed Lisa Sequino as the new President of its Makeup Brand Cluster, where she will focus on accelerating innovation and global growth. Analyst firm Berenberg has adjusted Estée Lauder’s price target to $61, maintaining a Hold rating, following a 9% year-over-year drop in group organic sales for the third quarter of fiscal year 2025. Despite sales declines, the company’s adjusted operating income exceeded expectations, reaching $403 million, which was significantly above the consensus estimate. UBS has also raised its price target for Estée Lauder to $62, while maintaining a neutral stance, acknowledging the company’s improved profitability but noting concerns about future earnings potential due to tariff impacts.
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