Goldman Sachs upgrades Estee Lauder stock to Buy on China recovery

Investing.com - Goldman Sachs upgraded Estee Lauder (NYSE:EL) from Neutral to Buy on Monday, raising its price target to $115.00 from $76.00. The stock, currently trading at $87.65, has shown strong momentum with a 60% surge over the past six months. According to InvestingPro data, analyst targets for the stock range from $61 to $120.

The upgrade reflects Goldman’s increased optimism about Estee Lauder’s business trajectory, particularly highlighting the stabilization in China where mainland sales returned to mid-single-digit growth with market share gains in the second half of fiscal 2025, following mid-single-digit declines earlier in the year.

Goldman Sachs also noted improving conditions in travel retail, with Hainan returning to growth in May and better inventory positions throughout the channel, along with management efforts to improve conversion rates from increasing traffic.

The firm pointed to Estee Lauder’s improving U.S. market share trends, with a return to share gains in the second half of 2025 after several years of declines, benefiting from a more diversified channel mix including an expanded presence on Amazon where it now has 11 brands.

Goldman Sachs expects Estee Lauder to achieve approximately 500 basis points of EBIT margin expansion through fiscal 2028, supported by productivity savings that have already driven gross margin recovery of 236 basis points in fiscal 2025.

In other recent news, Estée Lauder reported a 12.0% decline in fourth-quarter sales for fiscal 2025, slightly outperforming analyst expectations of a 12.6% drop. The company’s adjusted earnings per share were $0.09, aligning with consensus estimates and the company’s guidance range. Estée Lauder announced a reorganization of its geographic regions, effective July 1, 2025, which will see financial results reported under four new regions: The Americas, Europe, the United Kingdom and Ireland and Emerging Markets, Asia/Pacific, and Mainland China.

The company also appointed René Lammers as Executive Vice President, Chief Research & Innovation Officer, starting October 1, 2025. In a strategic move, Estée Lauder named Nia Long as its first North America Brand Ambassador, aiming to enhance its representation in digital, television, and print campaigns. Analyst firm JPMorgan lowered its price target for Estée Lauder to $99 from $101, maintaining an Overweight rating due to challenges in travel retail and brick-and-mortar operations in Asia. Canaccord Genuity maintained its Hold rating with an $85.00 price target amid the company’s recovery efforts. These developments highlight Estée Lauder’s strategic adjustments and market challenges.

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