Goldman Sachs boosts sentiment on Estée Lauder shares 💡

Estée Lauder’s (EL.US) shares are clearly gaining today after Goldman Sachs upgraded its recommendation from “Neutral” to “Buy” and raised the target price from $76 to $115, reflecting growing optimism about the company’s prospects. Estée Lauder is a well-known global producer of cosmetics, perfumes, and skincare products, with brands like Estée Lauder, MAC, Clinique, and La Mer considered flagship icons in the beauty industry.

Goldman Sachs' new rating reflects improved sales dynamics in the Chinese mainland, where after previous declines, average single-digit increases and a recovery in market shares are now observed in the second half of the fiscal year. Hainan's return to growth and improved inventory levels across the tourism channel were also an important catalyst, which reduced pressure on inventories.

The Investment Bank additionally emphasizes the improving trends of Estée Lauder's market shares also in the USA and the positive impact of the Management Board's actions on the conversion of growing traffic and operational efficiency. The expected expansion of the EBIT margin by approx. 500 basis points by 2028 and a slower than expected rate of decline in sales are building positive investor sentiment. Estée Lauder is also investing in geographical reorganization, channel diversification (e.g. Amazon) and brand development, which allows it to respond more effectively to changes in key markets. Thanks to this, the company presents itself as a beneficiary of the recovery in the Chinese market and effective corrective actions, which investors today translate into an increase in the valuation of shares.

The stock is extending its most dynamic rebound since 2022, as seen above its 50-week EMA. Source: xStation