Estee Lauder's Conservative Annual Guidance 'Expected,' Says This Analyst

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on Estee Lauder Companies Inc EL with a price target of $377.00.
The beauty products provider reported Q4 earnings above the Street expectations.
Herrity said the earnings upside was driven by better sales and expense control, strong growth in the Americas, particularly brick-and-mortar, as customers continued to return to in-store shopping.
The 10% revenue decline, the analyst thinks, was driven by a high-teens decline in the company’s largest category, skin care, as COVID-related restrictions/lockdowns weighed on the period.
A temporary reduction in capacity at its Shanghai DC further pressured the quarter.
Telsey opined that the Q4 decline seems to have entirely offset high-single-digit growth through the first three-quarters of the year, resulting in a flat annual result for the category.
The conservative outlook provided by Estee is a prudent approach to the year ahead given the number of macro challenges and uncertainties, said the analyst.
A potential improvement in the travel retail channel and a return of social and work engagements could provide possible upside to the outlook.
Price Action: EL shares are trading higher by 1.82% at $281.56 on the last check Thursday.

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