Wells Fargo Cuts Estee Lauder Target to $105 After Q2 Miss; Cramer Flags China Risks
Estee Lauder’s shares rose 52% over past year but are down 6.8% year-to-date after Wells Fargo cut its price target to $105 from $111 after second-quarter results missed expectations. Jim Cramer warned Chinese pricing pressures and product misalignment have stalled momentum, despite Hardman Johnston’s 600-basis-point gross-margin and 1000-basis-point operating-margin recoveries.
1. Stock Performance and Price Target Revision
Estee Lauder’s shares rose 52% over the past year but have slipped 6.8% year-to-date. Wells Fargo reduced its price target from $111 to $105 after second-quarter revenue and profit fell short of high expectations.
2. Jim Cramer’s Commentary on China Pricing
Jim Cramer cautioned that Chinese pricing pressures and product misalignment have undermined Estee Lauder’s recent rally, arguing the company lacks sufficient momentum to sustain gains despite prior management changes.
3. Hardman Johnston’s Margin Recovery Thesis
Hardman Johnston initiated a position in Estee Lauder, citing a 600-basis-point gross-margin recovery and a 1000-basis-point operating-margin improvement driven by restructuring and productivity measures, supported by mid- to high-single-digit revenue growth.