Estee Lauder (EL) Stock Forecast & Price Target

Estée Lauder Cos has showcased strong market resilience, particularly within its luxury brands, including significant organic sales growth from Clinique and double-digit increases in Japan, indicating robust performance across multiple geographical regions. The company also reported a solid earnings beat in the second quarter, supported by improved gross margin and effective expense management that aligns with its expanded profit recovery plan, having achieved over 60% of its FY25 goal in the first half of the year. Additionally, Estée Lauder anticipates modest gross margin expansion in the upcoming quarter, positioning itself for a return to sustainable sales growth and a robust double-digit operating margin over the coming years.

Estée Lauder Cos. experienced a notable decline in its financial performance, with the most recent quarter showing a 1% decrease in constant currency sales, particularly driven by a 6% drop in organic sales in the EMEA region and an 11% decline in Asia-Pacific, largely affected by weak travel retail conditions. The company anticipates a challenging outlook for the third quarter, projecting a decline in sales of up to 12% year-over-year on both reported and organic bases, exacerbated by ongoing pressures in global travel retail and difficult comparisons from the previous year. Furthermore, the majority of the company's key categories, including skin care and makeup, reported sales declines, contributing to a revised earnings per share estimate of $1.36 for FY25, reflecting ongoing operational challenges.