Estée Lauder: COVID To Blame For Weak Q3 FY21 And 8% Correction (Preview)

Company Update (EL US) (Buy)

Summary

• EL shares fell 7.9% on Monday after Q3 FY21 results disappointed, with an uneven sales discovery due to COVID resurgence in some regions.

• Group sales and EBIT exceeded pre-COVID FY19 figures, driven by Asia/Pacific and Skin Care each growing sales in the high 20s.

• Americas and EMEA were weak, and Makeup declined again, but countries where COVID was under control showed how a recovery is likely.

• EL has resumed investments and signed new retail partnerships in anticipation of a recovery. FY21 EPS is guided to be 14% above FY19.

• With shares at $288.93, we expect an exit price of $362 and a total return of 29% (8.1% annualized) by June 2024. Buy.

Why Is Estée Lauder Stock Down?

Estée Lauder shares fell 7.9% on Monday (May 3) after the company released results for Q3 FY21 (January-March of 2021). The fall in Estée Lauder stock is likely due to the results falling short of expectations, with a more uneven recovery during Q3 due to the resurgence of COVID-19 in some regions.

We originally in…