Estee Lauder Upgraded After Q4 Report Shows Higher Sales, Lower Costs

Analysts at Argus turned bullish on Estee Lauder Companies Inc EL after the company impressed investors in its fiscal fourth-quarter earnings report. The firm's John Staszak upgrades Estee Lauder's stock rating from Hold to Buy with a $125 price target as the earnings report suggests ongoing momentum moving forward.

The beauty market is seeing strong demand especially in the high-end category which bodes well for Estee Lauder as evidenced by one-third of its brands showing double digit growth in the quarter, Staszak noted. The company also saw overall strength in e-commerce and "travel sales" at major airport.

Looking forward the beauty company thinks it deliver a local-currency revenue growth of up to 8 percent and double-digit earnings growth over the next three years, the analyst continued. These should be considered to be achievable targets and the analyst's long-term earnings growth rate of 14 percent remains unchanged.

Meanwhile, Estee Lauder's reputation of steadily raising its dividend, which yields around 1.3 percent, should remain in place moving forward.

Finally, Estee Lauder's strong performance in the quarter also prompted the analyst to raise his rating on the entire consumer staples sector from Underweight to Market Weight. Investors are also encouraged to allocate up to 10 percent of their investments to this group.

Related Links:

Jefferies Sees Beauties And Beasts In The Modern Cosmetic Space

Snapchat Effect Gives Booming Cosmetic Industry A Makeover _______ Image Credit: By Pear285 (talk) (Uploads) - Pear285 (talk) (Uploads), CC0, via Wikimedia Commons