Global beauty giants are redefining growth strategies in a rapidly evolving market, reshaping consumer experiences and setting new industry benchmarks. Estee Lauder Companies Inc. (NYSE:EL) could begin generating topline growth as soon as the fiscal first quarter starting in September, "which should be followed by a return to double-digit EBIT margins in FY27 and beyond," according to Goldman Sachs.
The Estee Lauder Companies Analyst: Analyst Bonnie Herzog upgraded the rating to Buy, while raising the price target to $115.
The Estee Lauder Companies Thesis: The management seems to be taking the proper steps with their “Beauty Reimagined” strategic vision, Herzog said in the upgrade note.
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This includes a consumer-first approach as well as a focus on faster on-trend innovation "to become a more agile beauty company," which has led to the business underperforming over the past few years, she added.
The analyst mentioned five reasons for being "incrementally more optimistic," which are:
- The prestige beauty industry has mid-single-digit long-term growth potential.
- Stabilizing business trends in Estee Lauder's key China market, with mainland China sales returning to mid-single-digit growth in the back half of 2025.
- Abating headwinds within travel retail, with Hainan returning to growth in May.
- A return to market share gains in the U.S. in the back half of 2025, after several years of contraction.
- Strong savings driving a recovery in gross margins, which "should support EBIT margin expansion in FY26 and beyond while fueling continued reinvestments."
EL Price Action: Estee Lauder Cos shares were up 5.81% at $92.74 at the time of publication on Monday. The stock is approaching its 52-week high of $97.44, according to Benzinga Pro data.
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