What Happened?
Shares of beauty products company Estée Lauder (NYSE:EL) jumped 5.4% in the morning session after Deutsche Bank analysts upgraded the stock from Hold to Buy and raised the price target from $71 to $95 (implying more than a 20% upside), noting that demand concerns in the beauty space were fading.
The analysts pointed to growing signs that Estée Lauder's strategy is on the right track as it broadened its focus beyond China and travel retail. They also highlighted the company's push to speed up product innovation across its brands and price ranges, while shifting key decisions closer to the markets where sales happen.
After the initial pop the shares cooled down to $78.20, up 4% from previous close.
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What The Market Is Telling Us
Estée Lauder’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 7.9% after the major indices rebounded (Nasdaq +1.5%, S&P 500 +1.0%) as reports pointed to easing tensions between Israel and Iran.
The Wall Street Journal said senior Iranian officials had signaled a willingness to restart stalled nuclear talks, on the condition that Washington refrain from joining Israel's ongoing strikes. This development triggered a significant decline in oil prices, easing inflation concerns.
Also, the prior week’s sell-off likely triggered investors who opportunistically bought the dip after judging that some moves down may have been overdone.
Estée Lauder is up 5.7% since the beginning of the year, but at $78.20 per share, it is still trading 32.1% below its 52-week high of $115.13 from June 2024. Investors who bought $1,000 worth of Estée Lauder’s shares 5 years ago would now be looking at an investment worth $402.45.
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