Estée Lauder’s Beauty Gains Can’t Offset Global Headwinds, Says Analyst – Estee Lauder Cos (NYSE:EL)

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Estée Lauder Companies Inc EL and lowered the price forecast from $76.00 to $66.00.

Estée Lauder delivered a strong third-quarter earnings beat, driven by improved margins and cost control, with sales at the upper end of guidance.

The company updated its FY25 outlook in line with prior estimates, though fourth-quarter EPS guidance came in below expectations.

While its recovery plan is yielding positive results, ongoing pressures in Asia travel retail and a softening North American market prompt a reduced price target of $66.

EL is adapting to trade policy uncertainty by regionalizing its supply chain to increase flexibility. About 75% of U.S. sales are now sourced domestically or through trade agreements, while reliance on China is being reduced in favor of Japan and Europe.

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The company is also optimizing manufacturing and local sourcing to mitigate risks. No major FY25 impact is expected, but prolonged tariffs could affect FY26. More updates are expected in August, noted the analyst.

Estée Lauder brands are showing positive momentum, with Clinique leading U.S. market share gains for the 11th straight quarter.

The company gained market share in three of four categories, with EL ranking top two in skincare and makeup. MAC and The Ordinary also improved.

In China, multiple brands saw growth across all categories. While some emerging markets faced setbacks, trends are stable overall, with stronger performance expected in FY26.

Factoring in the third-quarter results and current trends in the business, the analyst expects total reported sales to decline 8.5% YoY to $14.29 billion (from down 6.8% to $14.54 billion previously).

In addition, on the bottom line, the analyst raised the FY25 EPS estimate to $1.55, up from $1.36 previously.

Estée Lauder CEO Stéphane de La Faverie reaffirmed the company’s “Beauty Reimagined” strategy during its third-quarter earnings call, highlighting early progress on five core priorities: expanding consumer reach, driving innovation, increasing marketing investments, enhancing efficiency, and rethinking operations.

Price Action: EL shares closed higher by 0.85% to $59.39 on Friday.

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