Estee Lauder (EL) Stock Forecast & Price Target

Estée Lauder Cos has demonstrated strong performance in the luxury beauty market, achieving notable organic sales growth across key brands such as Clinique and Le Labo, which contributed to robust results in the second quarter. The firm has successfully managed its gross margins, which are expected to expand modestly year-over-year, while also making significant strides in their profit recovery plan by reaching over 60% of their FY25 goals. With diverse distribution channels and a global presence, generating substantial revenue from multiple regions, the company is well-positioned to accelerate sustainable sales growth and enhance operating margins in the coming years.

Estée Lauder reported a 1% decline in constant currency sales last quarter, with significant organic sales decreases of -6% in EMEA and -11% in Asia Pacific, reflecting ongoing pressures in the global travel retail channel, particularly in key markets like Mainland China, Hong Kong, and Korea. The company's guidance for the upcoming quarter anticipates a reported sales decline of 10% to 12% year-over-year, underscoring the persistent weakness in the travel retail segment. Furthermore, only the fragrance category showcased any growth, while skin care suffered a notable 12% decline, contributing to a downward revision of the FY25 EPS estimate to $1.36 from $1.41, indicating challenging market conditions.