Canaccord Genuity maintains Hold rating on Estee Lauder stock amid recovery efforts

Investing.com - Canaccord Genuity has reiterated its Hold rating and $85.00 price target on Estee Lauder (NYSE:EL), the $31.2 billion cosmetics giant, following its fourth-quarter fiscal 2025 results. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with impressive gross profit margins of 74%.

The company reported fourth-quarter sales declined 12.0% year-over-year, slightly better than analyst expectations of a 12.6% drop and within the company’s previously issued guidance range of -15% to -11%. Adjusted earnings per share came in at $0.09, meeting consensus estimates and falling within the company’s guidance of -$0.11 to $0.14. InvestingPro data confirms analysts’ expectations of continued sales decline in the current year, though the company has maintained dividend payments for 30 consecutive years.

Despite the overall sales and earnings decline, Estee Lauder management highlighted market share gains in Mainland China during the fourth quarter and across all categories for the fiscal year. The company also noted improving share trends in the U.S. market, including share gains in the second half of fiscal 2025. The company maintains a solid financial position with a current ratio of 1.41, though it operates with a moderate debt-to-equity ratio of 2.16.

Looking ahead to fiscal 2026, management has guided for both sales and earnings growth year-over-year, though Canaccord notes this comes "on a low base." The company continues to execute its Beauty Reimagined growth plan while simultaneously implementing its Profit Recovery and Growth Plan to reduce costs and improve operational efficiency.

Canaccord remains on the sidelines regarding Estee Lauder stock, citing concerns about the new management team’s challenges in a competitive environment while balancing cost-cutting initiatives with business investments. The firm indicated it would maintain its current position until seeing "more visibility around executing more consistent sales and profitability growth."

In other recent news, Estee Lauder Companies Inc. announced its fourth-quarter earnings for fiscal 2025, surpassing analyst expectations. The company reported an earnings per share (EPS) of $0.09, exceeding the forecasted $0.0828, which represents an 8.7% surprise. Despite this earnings beat, the stock experienced a decline in pre-market trading, attributed to investor concerns over broader market conditions and future growth prospects. RBC Capital responded to these developments by raising its price target for Estee Lauder to $107 from $90 while maintaining an Outperform rating. RBC Capital noted that the company’s fourth-quarter results were solid and within the expected range. However, it was mentioned that the fiscal year 2026 earnings per share guidance might not meet the optimistic expectations of some investors. These recent developments highlight key financial insights and market reactions surrounding Estee Lauder.

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