Estee Lauder Companies, Inc. (NYSE:EL) disclosed fiscal second-quarter results that exceeded market expectations, propelled by widespread demand across its global markets and diverse product categories within its prestige beauty segment. The company reported adjusted earnings per share (EPS) of 89 cents, outperforming analyst consensus estimates of 83 cents. Additionally, quarterly sales amounted to $4.229 billion, reflecting a 6% increase year over year and slightly above the anticipated $4.219 billion.
Stéphane de La Faverie, President and CEO of Estee Lauder, highlighted the significance of the current fiscal year, remarking on the pivotal changes underway. He emphasized that the "Beauty Reimagined" initiative has invigorated the company’s operations as it undertakes the largest operational, leadership, and cultural transformation in the organization’s history. This transformation underpins the company’s confidence going forward and supports the adjustments made to its financial outlook.
Following the quarterly results, Estee Lauder raised its fiscal 2026 adjusted earnings guidance to a range of $2.03 to $2.23 per share, up from the previous forecast of $1.90 to $2.10. This guidance slightly surpassed the consensus analyst estimate of $2.15 per share. The company also revised upward its fiscal 2026 sales forecast to between $14.756 billion and $15.042 billion, a modest increase on the prior range of $14.613 billion to $15.042 billion, and in proximity to analyst projections of $14.934 billion.
The market reacted favorably to these results and outlook revisions, with Estee Lauder’s shares rising 5.1% to close at $101.59 on the Friday following the earnings release.
In response to these developments, several analysts updated their coverage and price targets for Estee Lauder:
- Christopher Carey of Wells Fargo maintained an Equal-Weight rating on the stock but adjusted his price target downward from $111 to $105, signaling a more cautious valuation despite solid results.
- Dana Telsey from Telsey Advisory Group retained a Market Perform rating and confirmed a $105 price target, sustaining a neutral stance on the stock’s near-term prospects.
- Filippo Falorni at Citigroup upgraded Estee Lauder’s rating from Neutral to Buy while maintaining a $120 price target, reflecting an increased conviction in the company’s growth trajectory following the earnings beat and raised guidance.
Estee Lauder’s performance and guidance revisions signal robust momentum driven by a comprehensive business transformation and sustained consumer demand across geographies and product lines. However, analysts’ mixed responses suggest market participants remain attentive to valuation and execution risks as the company navigates its strategic initiatives.
Key Points:
- Estee Lauder surpassed expectations with Q2 adjusted EPS of 89 cents versus 83 cents consensus.
- Quarterly sales grew 6% year over year, reaching $4.229 billion, slightly above analyst forecasts.
- Management raised fiscal 2026 adjusted earnings guidance to $2.03-$2.23 per share and sales guidance to $14.756-$15.042 billion.
- Share price rose 5.1% following the earnings report, indicating positive investor reception.
Risks and Uncertainties:
- Analysts exhibit divergent price target adjustments and ratings, reflecting varying views on valuation and future growth sustainability.
- The company is undertaking an extensive operational and cultural transformation, which carries execution and integration risks.
- The reliance on persistent strong demand across diverse markets is subject to macroeconomic and competitive pressures.