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On Monday, Piper Sandler adjusted its price target on shares of Estee Lauder (NYSE:NYSE:EL), increasing it to $108.00 from the previous $95.00, while maintaining a Neutral rating on the stock. The financial firm acknowledged the ongoing challenges faced by the company, particularly due to weaker performance in China, which is anticipated to continue affecting the business into fiscal year 2025.
The firm noted that Estee Lauder's recent financial guidance was less robust than expected, attributing this to the persistent pressures in the Chinese market. Despite this, Piper Sandler recognized that Estee Lauder is making strides in cost savings and brand rebuilding. Moreover, the company's recent executive management changes, with new appointments at the CEO and CFO positions, are seen as potential catalysts for a fresh start.
However, despite these positive developments within the company, Piper Sandler expressed caution due to several uncertainties that remain in the near to intermediate term. These uncertainties are believed to justify Estee Lauder's current stock valuation.
The analyst's statement highlighted the balance between progress and challenges, stating, "We continue to see weaker performance in China weigh on the business, with pressures expected to persist into FY'25, contributing to today's lighter than expected guidance.
While progress is being made on the cost savings and brand re-build fronts, and the recently announced leadership changes (CEO and CFO) could provide the business with a fresh start, we still see several uncertainties in the near/intermediate term justifying the current valuation."
Estee Lauder's stock performance and future outlook remain closely watched by investors, especially in light of the evolving market conditions and internal corporate changes. The updated price target reflects Piper Sandler's assessment of these factors as they relate to the company's valuation.
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