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On Thursday, DA Davidson maintained its Buy rating and $81.00 price target for Estee Lauder (NYSE:EL) shares, which currently trade at $65.89, near their 52-week low of $62.29. The firm’s analyst pointed to positive trends in social media engagement for the company’s key brands as a significant factor in the decision. According to recent proprietary social media surveys, three of Estee Lauder’s top brands, which contribute to approximately 65%-70% of sales, have seen a 1% increase in social media followers over the past year. InvestingPro data reveals the company maintains impressive gross profit margins of 73.15%, highlighting its strong brand positioning in the premium beauty segment.
The Estee Lauder brand itself has improved its position, moving up to #22 in the survey. The Ordinary, one of the company’s large brands, exhibited strong social media momentum, ascending four spots as its followers grew by 14%. This online presence and engagement are pivotal in the prestige beauty sector, where brand perception can heavily influence consumer purchasing decisions. InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, available for over 1,400 US stocks including Estee Lauder.
However, not all brands under the Estee Lauder umbrella are performing equally. The analyst noted that Origins, Too Faced, and GlamGlow seem to be the weaker links in Estee Lauder’s brand portfolio. There is speculation about the future of these brands, including the possibility that they could be sold off or otherwise divested to streamline the company’s focus on its stronger brands.
The $81 price target set by DA Davidson is based on a multiple of 40 times the firm’s estimated calendar year 2026 earnings per share (EPS) of $2.02 for Estee Lauder. This valuation reflects an expectation of continued growth and profitability for the company, bolstered by its successful brands and effective social media strategies.
Estee Lauder’s stock performance and investor sentiment are likely to be influenced by these insights into the company’s brand dynamics and strategic outlook. While the stock has declined 53.55% over the past year, InvestingPro analysis suggests the company is currently undervalued, with analyst price targets ranging from $61.10 to $122.10. As the market processes this information, Estee Lauder’s positioning in the competitive beauty industry remains a point of interest for shareholders and potential investors alike.
In other recent news, Estee Lauder reported a 6% decrease in net sales for the second quarter of fiscal 2025, primarily due to declines in skincare, hair care, and makeup sales. The company also took significant impairment charges on Tom Ford makeup and fragrance. S&P Global Ratings downgraded Estee Lauder’s credit ratings, citing prolonged business recovery, particularly in Asia, and increased restructuring charges that are expected to elevate leverage levels. Meanwhile, DA Davidson maintained a Buy rating with an $81 price target, noting that Estee Lauder’s organic sales decline was at the better end of its guidance range.
Estee Lauder has partnered with Serpin Pharma to develop new skincare products, leveraging biotech technology to address skin irritation and aging. Stifel analysts, however, lowered their price target for Estee Lauder to $77, maintaining a Hold rating due to concerns about the company’s turnaround efforts and investment needs. They also suggested that Estee Lauder consider brand divestitures to better allocate resources. The company’s new CEO is implementing strategic changes, including potential workforce reductions, to navigate current market challenges. These developments reflect Estee Lauder’s ongoing efforts to address its financial and operational challenges.
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