Morgan Stanley Sees Buying Opportunity from Estee Lauder Companies Sell-Off

In a report published Thursday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $77.00 price target on Estee Lauder Companies

. In the report, Morgan Stanley noted, “EL FQ2 EPS of $1.09 was ahead of the $1.06 consensus, despite a 3 cent negative EPS impact from a higher tax rate. However, quality of upside was low, as a +4.2% profit beat vs. consensus was driven by SG&A (A&P), as topline was 100 bps below consensus with organic sales growth of +4% (more than +7% adjusted for timing), vs. guidance of 3-5% and the ~4.5% consensus. By region, strength in Americas/EMEA (both up +6% or +9/7%, respectively adj. for timing/FX), and travel retail (+DD's), was mitigated by Asia Pacific softness (-3% or +5% adj.), with EL citing a slowing of China growth, with same door China sales off 4% y-o-y in Q2.” Estee Lauder Companies closed on Wednesday at $65.36.