Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com - HSBC upgraded Estee Lauder (NYSE:EL) from Hold to Buy on Wednesday, raising its price target to $99.00 from $80.00. The stock has shown strong momentum, gaining over 5% in the past week and nearly 7% over six months, though InvestingPro data indicates the stock may be entering overbought territory.
The upgrade comes as HSBC forecasts Estee Lauder will approximately double its earnings between fiscal years 2025 and 2027, albeit from what it describes as "a very low level." This projected growth stems primarily from cost-cutting measures and reorganization-led efficiencies rather than significant revenue increases. InvestingPro data shows the company maintains impressive gross profit margins of nearly 74%, though it hasn’t been profitable over the last twelve months.
HSBC notes that investors appear to be warming to Estee Lauder despite limited evidence of improved trends in key markets like China and the United States. The firm lowered its weighted average cost of capital assessment based on the "safety net" provided by the company’s enhanced restructuring plan.
The new price target represents approximately 28% upside potential from current levels. HSBC acknowledges that Estee Lauder shares "don’t look screamingly cheap" at roughly 26 times fiscal year 2027 price-to-earnings ratio.
The firm points out that Estee Lauder’s operating margin in fiscal 2027 will likely remain at approximately 11%, which it considers "somewhat depressed" compared to long-term potential of at least mid-teens percentages.
In other recent news, Estee Lauder has experienced several noteworthy developments. The company’s earnings and revenue prospects have been a focal point, with Evercore ISI expressing confidence that the consensus earnings per share estimate for 2026 may be underestimated. This optimism is supported by Estee Lauder’s market share performance improvements in China and the United States. Deutsche Bank (ETR:DBKGn) has upgraded Estee Lauder’s stock rating from Hold to Buy, citing the company’s diversification strategy beyond China and related retail channels as a positive growth indicator. Additionally, Estee Lauder has expanded its online presence by launching its products on the Amazon (NASDAQ:AMZN).ca Premium Beauty store, making its offerings more accessible to Canadian customers. However, Moody’s has downgraded Estee Lauder’s credit rating due to delays in recovery, citing challenges in the Asia travel retail market and uncertainties related to tariffs and global economic conditions. The company has also announced the appointment of Lisa Sequino as the new President of its Makeup Brand Cluster, where she will oversee the strategic direction and growth of brands like M·A·C and Bobbi Brown. These developments underscore Estee Lauder’s ongoing efforts to navigate market challenges and capitalize on growth opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.