Shares of Estee Lauder Companies Inc (NYSE:EL, ETR:ELAA) rose 6.5% on Thursday after Bank of America reinstated coverage of the beauty giant with a “Buy” rating and a $110 price objective, implying a 30% upside from current levels.
The brokerage cited growing confidence in Estee Lauder’s “Beauty Reimagined” turnaround plan, forecasting 4% annual revenue growth through fiscal 2027 and a 430 basis-point improvement in operating margin to 12%.
Bank of America’s FY27 EBIT estimate is 10% above consensus.
“We believe this time is different,” the analysts wrote, noting efforts under new management to triple product innovation speed, cut headcount by 10%, and reinvest savings into brand marketing and advertising.
Estee Lauder is the second-largest player in the $160 billion global prestige beauty market, with a portfolio of 25 brands including MAC, La Mer, and Clinique. But recent earnings have been under pressure, particularly from weakness in Asia, where China accounted for 26% of FY24 revenue.
Bank of America said the worst may be over in China, pointing to two consecutive quarters of improving demand and signs of stabilization in Hainan’s duty-free market. “We believe [Hainan] can return to growth in FY26E,” the firm said.
Estee Lauder trades at 2.4 times forward EV/sales, a 45% discount to L’Oréal and 35% below global beauty peers, offering room for a valuation re-rating if market conditions and execution improve.