KeyBanc Capital Markets raised its value goal for Estee Lauder Companies Inc (NYSE: EL) following Wednesday’s over 9 p.c rally in response to first-quarter outcomes.

The agency stated it sees Estee Lauder as a best-in-class operator worthy of its premium a number of, with potential upside as Asian momentum continues. Estee Lauder’s development within the Americas can stabilize prior to later, analyst Jason Gere stated in a Wednesday observe. 

Estee Lauder is poised to keep up its top-line progress and ship double-digit earnings per share progress on the premise of its “Leading Beauty Forward” financial savings, a rarity in shopper staples, Gere stated. (See Gere’s monitor document right here.)

KeyBanc’s value goal for Estee Lauder shares was raised from $115 to $135 and the agency maintained an Overweight on the cosmetics firm. 

Reviewing the Q1 outcomes, Gere stated natural progress of 9 p.c and earnings per share of $1.21 had been notably above the consensus estimates, as properly KeyBanc’s estimates. Organic gross sales progress was achieved on the again of energy in China, which helped offset the weak spot in Americas ensuing from comfortable division retailer gross sales and unhealthy climate, Gere stated. 

KeyBanc attributed the earnings beat to a powerful high line, together with SG&A timing shifts and cost-cutting that offset the year-over-year contraction in gross margin.

Estee Lauder raised its 2018 natural gross sales and earnings per share outlook, though the steering implied deceleration within the second-half, in keeping with KeyBanc. But analyst Gere sees motive for upside.

“Overall, the formula of driving top-line through reinvestment and leveraging fixed costs to create a cycle of sustainable growth is a trade-off investors should welcome,” he stated. 

Outlining what he likes concerning the firm, Gere stated the corporate’s natural gross sales progress stays best-in-class, helped by key investments in its fastest-growing channels and types. Cost-saving initiatives will enable Estee Lauder to reinvest behind capabilities, whereas additionally driving double-digit earnings progress, he stated. 

Downsides embody moderating progress within the “Prestige” magnificence class, in addition to reinvestment that is wanted to stabilize the corporate’s Americas enterprise — and tough comparisons for natural progress over the course of 2018. 

Related Links:

Assessing The Eligible Suitors For Estee Lauder If Acquisition Rumors Are True
three Beauty Companies Poised To Grow In Today’s ‘Selfie Generation’ 

Latest Ratings for EL

Date Firm Action From To
Nov 2017 Morgan Stanley Maintains Overweight
Nov 2017 Argus Maintains Buy
Nov 2017 BMO Capital Maintains Market Perform

View More Analyst Ratings for EL
View the Latest Analyst Ratings

Posted-In: Estee Lauder Jason Gere KeyBanc Capital Markets Xian SiewAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Here's Why Estee Lauder Shares Deserve To Trade At A Premium by: Pamela Hendrix published:


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