Analysts Are Downgrading These 5 Stocks

03. The Estée Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Holders: 59

The Estée Lauder Companies Inc. (NYSE:EL) is a global corporation specializing in manufacturing, marketing, and selling various beauty and personal care products. Their product portfolio includes skincare items, makeup, fragrances, and hair care products. The company operates on a worldwide scale, catering to customers across different countries. On June 5, The Estée Lauder Companies Inc. (NYSE:EL) was downgraded by Oppenheimer from Outperform to Perform without a specified price target.

The downgrade is a result of several factors, including the company’s report in early May, recent developments in the consumer and beauty sectors, and a decline in the company’s stock price. Oppenheimer views the risk/reward scenario for The Estée Lauder Companies Inc. (NYSE:EL) as less favorable. The analyst has revised their forecasts downward, further deviating from consensus estimates, making it difficult to envision the shares outperforming at current levels. Oppenheimer points to aggressive Street estimates, a premium valuation compared to The Estée Lauder Companies Inc. (NYSE:EL) historical performance, and the potential for conservative guidance from management in August as reasons for the downgrade. The firm highlights that Estee Lauder is no longer a “beat and raise” story as it has been in the past, indicating increased risk to the company’s premium valuation multiple.

ClearBridge All Cap Growth Strategy made the following comment about The Estée Lauder Companies Inc. (NYSE:EL) in its Q4 2022 investor letter:

“The Estée Lauder Companies Inc. (NYSE:EL), which manufactures and markets cosmetics, fragrances, skin and hair care products across a number of well-known global brands including Clinique, MAC and Bobbi Brown, adds to our group of secular growers. Estee Lauder is a global leader in the prestige beauty space, which has outgrown the broader home and personal care category since 2010 and has historically been recession resilient. The company has substantial brand and pricing power and is over indexed to the highly profitable prestige skin care category. We believe the company’s most recent earnings report and 2023 guidance update, which was cut significantly due to uncertainty over China’s zero-COVID policy (China and travel retail are key growth drivers), provided an attractive entry point. At this point, we believe the stock has been significantly derisked and could see potential upside from a China recovery.”