Estée Lauder (NYSE: EL) jumped more than 5% in early trading Friday, following an upgrade to “Strong Buy” from Zacks Investment Research that made the stock a top gainer in the S&P 500.
The upgrade is tied to Estée Lauder’s Profit Recovery and Growth Plan, which Zacks said is supporting margin recovery, operational efficiencies, and stronger sales visibility. "The Beauty Reimagined strategy, digital expansion and portfolio investments are helping EL improve innovation, consumer reach and online engagement," Zacks analysts said in a note.
The research firm highlighted strong execution and a positive outlook, forecasting 3.6% revenue growth and 32.5% earnings growth for the fiscal year ending June 2027. The consensus estimate for next year’s earnings has improved 0.9% in the last seven days.
The bullish call marks a potential turning point for the cosmetics giant, which previously drew caution from some analysts. Concerns over lagging organic revenue and an operating margin of -0.7%, well below the industry average, had weighed on the stock, which trades at a forward price-to-earnings ratio of 26.5.
Zacks pointed to strengthening online sales momentum and broader distribution across platforms like Sephora, Amazon Premium Beauty, and TikTok Shop as key to its omnichannel position. The firm also sees improving trends in Mainland China and other emerging markets as a long-term growth support for the company.
This positive assessment contrasts with earlier critiques that the company’s core business was underperforming and might require acquisitions to stimulate growth. The successful execution of its internal recovery plan appears to be shifting that narrative.
The upgrade suggests growing confidence that Estée Lauder's turnaround strategy is taking hold, with digital and international channels expected to drive performance. Investors will now watch the company's upcoming earnings reports to see if the operational improvements translate into the strong profit growth that Zacks anticipates.
This article is for informational purposes only and does not constitute investment advice.
