Estée Lauder upgraded to overweight at Piper Sandler after stock drops nearly 40% in 2024

By Steve Gelsi

Analyst Korinne Wolfmeyer lifts price target on beauty giant to $114 from $95

Estée Lauder Cos. drew an upgrade to overweight from neutral at Piper Sandler on Thursday as analyst Korinne Wolfmeyer said she's more bullish on the beauty giant after its stock has lost more than a third of its value so far this year.

"We see little reason to suggest the bear thesis could play out much further here," Wolfmeyer said as she raised Estee Lauder's (EL) target price to $114 a share from $95 a share.

Estée Lauder's stock fell under pressure earlier this week when the company issued a weaker-than-expected outlook for 2025 due partly to an expected slowdown in China sales.

At last check, Estée Lauder's stock has fallen about 36% in 2024, compared with a nearly 18% rise by the S&P 500.

After comparing updates with peers such as Coty Inc. (COTY) on the state of the prestige beauty market, Wolfmeyer said Estée Lauder's recent valuation "suggests limited downside."

Estée Lauder's warning about a further slowdown in its China business may not turn out to be as dire as some fear, she said.

Also read: Estée Lauder's stock falls on weak outlook due to China declines

"While nothing is certain when it comes to China, we do believe we're at a point where investors can have more confidence in current expectations," Wolfmeyer said.

In another bright spot for Estée Lauder, an effort under way to find a successor for retiring Chief Executive Fabrizio Freda should be viewed in positive light, Wolfmeyer said.

Estée Lauder is also moving more quickly than expected into higher-margin channels such as Amazon.com Inc. (AMZN), she said.

Estée Lauder's stock rose 1.8% on Thursday but remains down about 8% in the past month.

-Steve Gelsi

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08-22-24 1255ET

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