Citi Raises CY12 EPS Estimate On EL

While Estee Lauder Companies Inc.'s EL stock price may look expensive based on the current EPS estimate for the next fiscal year, “we opt to use a P/E/long term growth rate valuation methodology for this stock, to better capture its sustainable strong EPS growth,” Citi reports. “Our forecast for 15% EPS growth for EL for the next several years (well ahead of the peer group), coupled with an average 1.5x PEG ratio for the group, implies a target multiple for EL of roughly 23x. Based on our new CY12 EPS estimate of $4.50, we derive a $105 price target for EL.” Estee Lauder closed Friday at $89.35.