Estée Lauder: Near COVID-19 Low After Q4 FY23 Results

Company Update (EL US) (Buy)

Highlights

• EL shares fell another 3.3% after results to their lowest since April 2020

• Sales fell 10% in FY23 after issues with COVID and daigou in China

• Organic growth turned positive in Q4 and was strong in key markets

• EL sees 6-8% organic sales growth in FY24 and full margin recovery over time

• At $156.59, we see a 49% total return (15.3% p.a.) by June 2026. Buy

Introduction

Estée Lauder (“EL”) reported Q4 FY23 results on Friday (August 18). EL shares finished the day down 3.3%, and are now down 58% from their peak at the end of 2021, as well as being only a few percent higher than their COVID-19 low:

EL Share Price (Last 5 Years)

Source: Google Finance (18-Aug-23).

We believe EL is once again a good opportunity for the patient investor. We first published our research on EL in April 2020 as a Buy, and we have left our rating unchanged since. (See our May article for a recap of its financial track record since then.) While this is now clearly a mistake, we have removed EL from our “top buys” l…