Estée Lauder: Beauty Stock On Sale After 26% Fall Since January
(Preview) Company Update (EL US) (Buy)
Summary
EL shares have fallen 26% since their peak in early January, the result of wider market turmoil following the Russian invasion of Ukraine.
While EL has suspended all commercial activity in Russia, its exposure to the country is just slightly over 1% of total revenues.
Operational performance has continued to be strong, with organic sales growth at 14% last quarter and guided to be 10-13% for FY22.
All regions and segments had good growth in Q2; we expect long-term EPS growth to be low-teens, from sales growth and margin uplift.
With shares at $277.68, we expect an exit price of $440 and a total return of 62% (16.0% annualized) by June 2025. Buy.
Introduction
We review our investment case in The Estée Lauder Companies Inc. after its shares have fallen 26% since their peak in early January.
We initiated our Buy rating on Estée Lauder in early April 2020. EL shares are now down 2.7% over the past year, though still having gained 72% (including dividends) since our initiation.
We believe E…