Why This Estee Lauder Analyst Is No Longer Bullish Ahead Of Earnings
Analysts expect Estee Lauder Companies Inc 
EL to announce earnings per share of 27 cents on $3.83 billion in revenue when fourth-quarter financials are released Monday before the market opens.
In a recent note, Bank of America‘s Bryan D. Spillane downgraded the stock from Buy to Neutral. He also slashed the target price from $140 to $100 citing muted growth expectations.
Estee Lauder faces headwinds in its profit recovery due to weaker-than-expected performance in China. The Chinese beauty market historically contributes about a third of its sales, Spillane said.
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Estee Lauder’s recovery strategy aims to stabilize demand in China and improve U.S. market share, but has been challenged by a deceleration in China since March and softening U.S. demand.
Consequently, profit recovery timing is uncertain, especially given the need for potential increased marketing amidst slowing demand.
As a result, Spillane reduced the fiscal 2025 EPS expectations from $3.95 to $3.55.
Spillane’s valuationrepresents a slight discount to the S&P Household and Personal Care Index.
Downside risks include continued weakness in developed markets, slower growth in key channels, higher brand investment needs, and economic factors like a potential recession or prolonged COVID-19 impact, he said.
Conversely, upside risks include a quicker recovery in the makeup segment, particularly in the U.S., a faster return to global travel and rising middle-class consumption in emerging markets.
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