The Estée Lauder Companies Inc. (EL) is a global leader in the beauty industry with a market cap of $40.6 billion. The New York-based company manufactures and markets a wide range of skincare, makeup, fragrance, and hair care products through various retail channels worldwide.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Estée Lauder fits this criterion perfectly. Renowned for its luxury brands like Clinique, M·A·C, and La Mer, Estée Lauder excels in delivering innovative beauty products and maintaining a global presence in both digital commerce and retail channels, making it the world’s second-largest cosmetics company.
However, the beauty products giant has dropped 45.6% from its 52-week high of $198.86, achieved in July last year. Shares of EL are down 29.8% over the past three months, underperforming the broader S&P 500 Index's ($SPX) 4.7% gains over the same time frame.
Over a longer term, EL has struggled, with its shares declining 26% on a YTD basis, significantly trailing the SPX's nearly 15.3% gains. Shares of Estée Lauder have slid 44.2% over the past 52 weeks, compared to SPX's 25.7% returns over the same time frame.
To confirm the bearish price trend, EL has been trading below its 200-day moving average since last year and has consistently remained below its 50-day moving average over this period despite experiencing some fluctuations earlier this year.
EL has underperformed due to persistent challenges in its key markets, such as a slower-than-anticipated recovery in Asian travel retail and inventory tightening by retailers. Plus, despite exceeding earnings expectations, the stock plunged almost 13.2% on May 1 after it reported Q3 earnings results, primarily due to its forecast for Q4 falling below analysts' expectations and a lowered annual organic sales estimate driven by ongoing weakness in China's prestige beauty sector.
To highlight the stock's underperformance, its rival Ulta Beauty, Inc. (ULTA) has declined 16.9% over the past 52 weeks and is down 21.1% on a YTD basis, showing a less pronounced decline compared to EL in both periods.
Despite the stock’s underwhelming price action, analysts think EL can recover soon. The stock has a consensus rating of “Moderate Buy” from the 26 analysts in coverage, and the mean price target of $147.17 is a premium of 32.8% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
