Estée Lauder's Stock Faces Sinking Confidence on Wall Street
Estée Lauder's stock is experiencing a decline in optimism among Wall Street investors. Citigroup's Filippo Falorni recently downgraded the shares of the renowned beauty retailer (ticker: EL) to Hold, after previously giving it a Buy rating in February. Along with the downgrade, the analyst also revised down the target price to $195, down from the earlier prediction of $240.
On Tuesday, Estée Lauder's shares dropped 1.6% to $177.15 while the S&P 500 was down 0.4% and the Dow Jones Industrial Average saw a marginal increase of less than 0.1%. The decision to invest in Estée Lauder stock in July 2022 has not been fruitful for investors.
The company has cited a slower-than-expected recovery in traffic from China and other Asian markets as a factor impacting sales. In May, they reduced their forecast for adjusted earnings per share for the fiscal year 2023 that concluded in June. The lowered range now stands between $3.29 and $3.39, compared to the initial forecast of up to $5.02 per share announced in February. Analysts are currently estimating annual earnings per share to be around $3.36.
Estée Lauder is set to release their quarterly results for the final quarter of fiscal year 2023 on August 18, before the market opens. Wall Street anticipates that the company may report a loss of four cents a share for the quarter, which would mark its first quarterly loss in three years.
Investor Confidence Shaken by Estée Lauder Cybersecurity Incident
Investor confidence took a hit on July 18 when Estée Lauder disclosed a cybersecurity incident that had a disruptive impact on its business operations.
Analysts Predict Weak Results in the Coming Quarters
Citi analyst Falorni anticipates that Estée Lauder's results will be weak in the next few quarters due to various challenges, including China mobility issues. The analyst expressed concerns about the potential erosion of investor confidence if the company continues to deliver underwhelming results.
Downgrades by Leading Analysts
Following in Oppenheimer analyst Rupesh Parikh's footsteps, Citi has downgraded Estée Lauder's shares. Parikh expressed concerns about the possibility of conservative guidance from management and weakening consumer spending power. Jefferies and Piper Sandler have also downgraded the company's shares from a Buy equivalent rating to Hold, according to FactSet data. Currently, 55% of analysts tracking the stock rate it as Buy, while 42% hold a Hold rating. The remaining analysts advise selling the stock.
Stock Performance
Estée Lauder's stock has seen a decline of 29% this year, in stark contrast to the S&P's 19% gain.
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