Estée Lauder: Inflection Point After Q2 FY24

Company Update (EL US) (Buy)

There are clear signs things are getting better, though October-December results were still weak.

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Highlights

• Shares rose 12% after results, but are still down 59% since 2021

• Mgmt. hail an “inflection point”, with sales growth set to resume

• “Profit recovery” plan expanded, with headcount to be cut 3-5%

• Q2 FY24 results were still weak; FY24 guidance was cut slightly

• At $150.28, we see a 53% total return (19.7% p.a.) by June 2026

Introduction

Estée Lauder (“EL”) reported Q2 FY24 results on Monday (February 5); EL shares were up by as much as 19% at one point, before finishing the day up 12.1% (at $150.28), though still down 59.4% from 2021 year-end:

EL Share Price (Last 5 Years)

Source: Google Finance (06-Feb-24).

The main positive from Q2 FY24 (October-December) results was that management has reiterated their expectation of an inflection point in the current quarter, with Q3 FY24 orga…