Evercore ISI analysts reiterated their Outperform rating on Estee Lauder (NYSE:EL) with a price target of $130 on the stock.
The analysts highlighted a positive trend in Estee Lauder’s online sales in China, which have shown growth in the low double digits. This increase is largely driven by market share gains in skincare, particularly through the La Mer and Re-Nutriv lines. While this improvement in the first quarter of fiscal 2025 is encouraging, the analysts remain cautious about reading too much into these figures due to seasonal factors—July and August are typically smaller sales months following lackluster “6.18” promotions and weaker duty-free sales in Hainan. Additionally, retailers in China and Hainan have reduced reorders, with beauty product imports down 6%.
However, the analysts believe that the rise in online sales helps mitigate the risk of prolonged destocking beyond the first quarter, aligning with current guidance. Estee Lauder’s ability to regain market share from L’Oréal Luxe in official channels without relying on discounts or price reductions highlights the strength of its brands and skincare technology among Chinese consumers. Despite concerns about China’s economic cyclicality and slower growth rates, analysts remain optimistic about Estee Lauder’s competitiveness in the region.