Raymond James Raises Estee Lauder Price Target to $130, Boosts 2027 EPS to $3.05
Raymond James upgraded Estée Lauder to Strong Buy with a $130 price target and raised fiscal 2026 and 2027 EPS estimates to $2.23 and $3.05, above Bloomberg consensus. While North America declines have eased signalling stabilization, uneven Asia demand and volatile travel retail still pose downside risks.
1. North America Stabilization
Estée Lauder reported an easing of revenue declines in North America during the latest quarter, with year-over-year sales down only low single digits compared with mid-single-digit declines in the prior period. The improvement was driven by market share gains in prestige skincare and makeup, supported by new product launches in the Advanced Night Repair and Double Wear franchises. Management highlighted that consumer traffic trends in department stores have shown sequential recovery over the past three months, suggesting stabilization in the core U.S. business.
2. Asia Demand Remains Uneven
While Greater China delivered mid-single-digit revenue growth, other parts of Asia Pacific saw continued softness, with sales in travel retail down high single digits due to ongoing volatility in international travel patterns. The company noted that Chinese domestic travel recovered to about 85% of pre-pandemic levels, but spending per transaction remains below historical norms. Leadership is focusing on luxury travel hubs and regional flagship stores to capture rebound opportunities once demand fully normalizes.
3. Analyst Upgrade Reflects Execution Shift
Raymond James elevated its rating to Strong Buy and identified Estée Lauder as a top pick for 2026, citing the transition from narrative to execution in the company’s turnaround. The firm believes fiscal year 2025 marked the earnings trough and expects stronger profit growth as cost savings from the Profit Recovery & Growth Plan continue to materialize. They highlighted margin expansion initiatives, including SKU rationalization and improved logistics efficiencies, as catalysts for healthier profitability.
4. Raised Earnings Forecasts and Valuation
Following the upgrade, Raymond James lifted its fiscal 2026 and 2027 EPS forecasts to 2.23 and 3.05, respectively, compared with consensus estimates of 2.16 and 2.93. The new price target of 130 implies a valuation multiple of 37x calendar-year 2027 earnings and 18x EV/EBITDA. The firm expects the company’s investment in high-growth beauty segments—especially skincare and prestige fragrance—to underpin sustainable sales and margin expansion over the next two years.